September 14, 2010

Eyeing the battle between lit and dark markets breaking out across the world Fidessa has expanded its fragmentation analysis tools to offer global coverage of how stocks are executing from more than 140 venues in US, Canada Japan and Asia as well as Europe.

On Monday, Fidessa announced that it launched a global coverage of its Fragmentation Index (FFI) and Fragulator, which are both free to use Web-based services. Both tools were first launched in Europe to provide an unbiased view of the state of fragmentation following the introduction of MiFID and the rise of alternative trading platforms. “We’ve taken what we’ve developed in Europe and applied that to the rest of the world,” said Steve Grob, director of group strategy at London-based Fidessa, in an interview in Advanced Trading’s New York offices last week.

One of the main goals is to provide transparency into the impact of alternative trading venues in each region and to provide an “unbiased” global picture of the stock trading patterns within lit and dark venues as well as OTC markets.

“You’ve got this global experiment of technology being applied to markets and it’s replacing [what has been] these historical dominant venues with lit and dark venues,” observed Grob, who emphasized that Fidessa is an unbiased source of objective information.

The purpose of the FFI (first launched in 2008) is to give a single number that measures the fragmentation of stock. “The higher the number the more venues you’ll need to visit to best execute the stock,” explained Grob.

For example, a trader can compare the fragmentation of the FTSE 100 vs. Dow Jones vs. Japan’s Nikkei 225 index, which would calculate what percentage of the stocks in each index are traded in dark pools. The Fragulator, launched in 2009 for European stocks, shows where and how stocks are trading.