Instinet's Chi-X Global to challenge exchanges

By Daisy Ku

LONDON, Feb 8 (Reuters) - Instinet, an agency broker owned by Nomura Holdings (8604.T: Quote, Profile, Research), announced on Friday the formation of Chi-X Global, as it expands its alternative trading platforms to compete with traditional exchanges around the globe.

Instinet launched Chi-X Europe in March last year to battle traditional exchanges such as the NYSE Euronext (NYX.PA: Quote, Profile, Research)(NYX.N: Quote, Profile, Research), London Stock Exchange (LSE.L: Quote, Profile, Research) and Deutsche Boerse (DB1Gn.DE: Quote, Profile, Research).

A consortium of 13 investment banks, including eight of the nine investment banks funding Turquoise, a rival system set for launch in September, took "a significant minority stake" in Chi-X Europe last month.

"Based on the favourable response from market participants to Chi-X Europe, we feel there exists an excellent opportunity to bring the comparable cost savings and market efficiencies to investors in other markets, thus our formation of Chi-X Global," Instinet co-CEOs Anthony Abenante and Fumiki Kondo said.

Chi-X Global, which holds trading platforms in Europe, Canada and Asia, said it is also applying for regulatory approval to launch Chi-X Australia.

Chi-X Europe traded 1.9 billion shares in the fourth quarter in 2007, up 177 percent from the third quarter, with a 71 percent increase in turnover to 34.6 billion euros ($50.2 billion).

Analysts expect European exchanges to lose 10 percent of their market share in the next three years with the rise of new trading vendors such as Chi-X and Turquoise. (Editing by Sue Thomas)