Liquidnet Reveals Names of Streaming Liquidity Providers
Liquidnet, the electronic marketplace for block trading, announced a list of third-party streaming liquidity providers(SLP) that will interact directly with Liquidnet H20. They are: Bloomberg Tradebook, BNY Brokerage, Instinet, FutureTrade, Miletus Trading, Piper Jaffray, EdgeTrade, UNX and Goldman Sachs Execution & Clearing, L.P. Liquidnet H20 was rolled out to a small group of Liquidnet members in September of 2005 and the company recently began the launch of the new product to its full membership base.
"The Liquidnet H20 model is the first and only one with the potential to bring together the entire institutional equities market in a single venue," states Seth Merrin, CEO of Liquidnet in the release. "Our members' orders can now simultaneously interact with the largest pool of natural liquidity in the industry as well as smaller, execution-bound orders while providing price improvement on every execution. This model represents a critical shift in the way institutional trading will occur," Merrin states in the release. The latest version of Liquidnet's block-trading system, Liquidnet H20, brings in execution-bound order flow from third-party liquidity sources to cross against its existing wholesale liquidity pool.
In a reversal of the current model for buy side traders, instead of institutional-sized orders being sliced and diced into the market in search of liquidity, Liquidnet H20 brings the smaller-sized orders to the buy-side trader (wholesaler), where the larger block orders (10,000 shares or more) will absorb those 400-, 300- or 200-share orders at a mid-point price without putting pressure on the marketplace.
SLP order flow interacts with Liquidnet H20 only when there is an order created by a Liquidnet member--there is no "pinging" or guessing, the release says. The orders that interact with Liquidnet H20 are agency orders that are automatically routed off a smart router to an execution venue, with no direction or knowledge form human sales traders, the release says.
"With Liquidnet H20, BlackRock can execute large orders efficiently, without market impact, simply by pairing off against the order flow coming through H20," states Dave Dalzell, director and equity trader at BlackRock, Inc., a $450 billion investment manager, in the release.
According to Dalzell's comments in the release, BlackRock is able to trade its orders in H20 where liquidity comes directly to it rather than searching for it and the firm is able to maintain its anonymity.
In other news, Liquidnet announced that its average daily volume for the first quarter of 2006 was almost 44.5 million shares, an increase of 27 percent over the fourth quarter of 2005 and an almost 62 percent increase over the first quarter of 2005. This marks the twelfth consecutive quarter of growth in volume traded. The block trading marketplace executed more than 2.7 billion shares of U.S. equities in the first quarter of 2006.
ISE Enters the Stock Exchange Business With Strategic Partners
The International Securities Exchange (ISE) is launching a stock exchange in partnership with key strategic firms that are leading broker-dealers and members of the electronic options exchange. ISE will retain majority ownership of the ISE Stock Exchange, and the strategic partners will have joint ownership interests in the business, the ISE announced on Wednesday. The strategic partners include Bear Stearns, Citadel Derivatives Group, Deutsche Bank, Interactive Brokers Group LLC, JPMorgan, Knight Capital Group and Sun Trading.
The ISE expects to introduce its first product, Midpoint Match (MPM), early in the third quarter, pending regulatory approval. MPM is a continuous, instantaneous, fully automated and anonymous matching platform for trading stock. The matching platform will execute orders at the midpoint price of the national best bid and offer (NBBO) throughout the trading day.
"ISE Stock Exchange is the first exchange to offer an equities matching platform built specifically to support the electronic trading strategies that define today's market, but until now, haven't been open to all market participants in a single arena," stated
The patent-pending trading platform will match and execute all round lot orders, large and small, and is especially suited for orders generated by algorithms, according to the ISE. An integrated displayed market offering in the fourth quarter, subject to regulatory approval, will follow the MPM.
Participation is open to all members of the ISE and broker-dealers who become members of the ISE Stock Exchange. Users can access MPM via their existing trading platforms and protocols, including FIX.
BAS Appoints Almgren to Head Quantitative Strategies for Equities
Banc of America Securities (BAS) named Dr. Robert Almgren to head of quantitative strategies for equities. Almgren joined BAS in 2005 to focus on developing algorithmic trading strategies for thinly traded and small capitalization stocks. His new role expands his responsibilities to encompass all automated client-trading methodologies, according to the release.
Dr. Almgren, who holds a Ph.D. in applied and computational mathematics from Princeton University, has an extensive research and consulting record in applied mathematics, optimal trading strategies and transaction cost measurement. In December 2000, he coauthored the seminal academic paper on arrival price algorithms, "Optimal Execution of Portfolio Transactions."
"Robert is a leader in the field of applied mathematics and has been instrumental in our development of new and unique algorithmic trading strategies," stated Peter Forlenza, global head of equities, in the release. "We look forward to leveraging his expertise even further as he leads our quantitative strategists in their continued development of innovative electronic trading strategies for our clients," Forlenza further stated in the release.
Prior to joining BAS, Almgren spent five years at the University of Toronto as a tenured professor of mathematics and computer science, including three years as director of the master of mathematical finance program. Earlier in his career he spent eight years at the University of Chicago, where he held positions as assistant director of mathematics, and then as senior lecturer in mathematics and associate director of the Program on Financial Mathematics.
Gain Capital Closes $40 Million Equity Investment
Gain Capital, an online, nonbank provider of foreign exchange (forex) trading and asset management services, received a $40 million equity investment from VantagePoint Venture Partners, completing its Series D investment round. VantagePoint obtained a minority stake in the firm and the funds were immediately used to repurchase outstanding stock from existing GAIN shareholders, the release said.
VantagePoint is a $2.8 billion fund that specializes in active multistage investing with a focus on fast growing -companies at all stages of development.
"Currency trading has been one of the fastest-growing segments of the electronic trading universe in recent years," stated Jim Mills, managing director of VantagePoint Venture Partners. "As a pioneer in this market, Gain Capital has helped drive the growth of the market and has become a highly profitable company," stated Mills in the release, who has joined Gain's board of directors.
Gain Capital reported record revenues for the fiscal year ending Dec. 31, 2005, increasing over 70 percent as compared to the previous year. It was also named the ninth fastest-growing technology firm in North America on the Deloitte & Touche Technology Fast 500, with an increase in revenues of 23,313 percent from 2000 to 2004.
"The combination of Gain's strong position within the forex industry and the growing acceptance of forex as a tradable asset class among both retail and institutional investors will continue to fuel the firm's growth over the next several years," stated Mark Galant, CEO and founder of Gain Capital.