Ballista Securities expects to launch the industry's first electronic liquidity pool for block options and delta neutral trading in September. Ballista announced the live date after receiving approval for membership as a broker-dealer inFINRA (Financial Industry Regulatory Authority).
With this designation, Ballista is able to allow full trading operations to begin next month. The new platform is aggregating fragmented options liquidity for the improved execution of large trades and complex strategies.
"With this approval, Ballista Securities will offer traders the ability to quickly and easily tap into multiple sources of liquidity through our platform, vastly improving the execution of delta-neutral strategies and block trades," stated Robert Newhouse, CEO of Ballista. "Ballista alleviates options market inefficiencies such as information leakage, lengthy execution times and manual processes with an anonymous, secure and time-efficient solution," further stated Newhouse.
Among the factors that contribute to fragmentation in the options markets are the continued growth of hedge funds, increased utilization of options strategies, new exchanges and growing amounts of passive, off-exchange liquidity, noted the company. In addition, regulatory changes such as the SEC-mandated penny pilot program have further complicated the task of sourcing sufficient options liquidity for institutional traders.
Ballista gives traders anonymous, electronic access to both "public liquidity" found on exchanges and "non-public liquidity" offered by banks, vetted market makers and hedge funds, said the company.
When a trade request enters the Ballista platform, it is placed in an open electronic auction for up tot five minutes. During this time, other Ballista participants (i.e., market makers, banks and hedge funds) may offer liquidity to the advertised trade. Should the auction period end without the trade being fully executed, the "initiator and best priced liquidity provider are placed into a private electronic negotiation room allowing for direct, normalized negotiation between the two parties.
Ballista is available as a software-based trading platform of via a FIX-based interface.