UPDATE FROM TURQUOISE

To The Turquoise Community,

Today we announced that the FSA has approved a variation in our permissions that allow Turquoise to provide a new service to operate alongside our expanding Turquoise MTF. We are pleased that from early July we will offer TQ Channel whose users will benefit from centralised, anonymous access to the non-displayed liquidity of a variety of providers. Several major liquidity partners have already signed up to participate, and we expect to announce several more in the weeks ahead.

Trends in European market structure, including smaller trade sizes happening at higher frequency, have made the visible markets more difficult to navigate efficiently, which in turn has catalysed the development of "dark pools" and various forms of internalisation. As these non-displayed liquidity sources have gained importance, institutional traders on the buy- and sell-sides have clamoured for access to this non-displayed liquidity, and for some intelligent design that re-aggregates it.

That's where TQ Channel comes in. Using our wide network of member connectivity and our established position as a central, secure and anonymous platform, TQ Channel will accept incoming orders from clients, parse them through a series of algorithms, and pass the resulting orders to liquidity partners for execution. Users further benefit from the fact that both sides of the transaction will be centrally cleared by EuroCCP, thereby mitigating counterparty risk.

From the earliest days at Turquoise we stated our intent to lead with innovation and to develop services that delivered real value to our Community. We're thrilled to be offering in TQ Channel a new service that delivers enhanced liquidity and meaningful price improvement, both of which benefit asset managers and their end-investors. At the same time, for the firm originating the order and the one executing it, the economics of trading and clearing will represent terrific value.

In the last 2 months we've been consistently developing our market share in the Turquoise MTF, and are pleased to report great progress for visible and non-displayed orders. Our overall market share in the largest European markets is back to our earlier levels, and we've posted record results in growth areas like Spanish stocks. Our average dark order trading volume is up ~50% since we began our mid-point reference price order book a month ago, with users enjoying 4-8 basis points average price improvement on a daily basis.

People have been asking what we attribute the market share gains to. The answer is three-fold: bank and broker members have been posting greater amounts of their natural passive order flow, citing the experience of Turquoise outperforming on fill rates. We have added a number of market-making firms who are also attracted to our fill rates, and they have been increasing their volumes. And, finally, the fill rates impress because of members whose smart order routing effectively identify best-or-equal prices on Turquoise and take them. Simply put, the market recognises Turquoise as a best execution venue.

Lots more to come, but with your support we're moving steadily in the right direction. Thank you all, and we at Turquoise look forward to working with you as you benefit from these innovative, new services.

Best regards,

Eli