Buy-side traders looking to trade large blocks of equities in the U.S. and abroad will soon have another option for their orders. After making several strategic hires in recent months, including new CTO Brian Weston (see related article, page 14), Aqua is anticipating a launch later this summer, according to Kevin Foley, the company's president and CEO.
The electronic equities block-trading platform, which is backed by eSpeed and Cantor Fitzgerald, will be launched simultaneously in the U.S. and Europe, and "will move east from there," Foley says. "MiFID is an unbelievable opportunity, and we will be an ATS right out of the gate under the new regulation. It's the most attractive opportunity for electronic trading over in Europe than there ever has been or will be," he contends.
As liquidity pools continue to pop up, Foley says, block liquidity is still a problem, and Aqua will serve an important niche for large institutional block orders. "It's vital that you can assure participants that information is only shared on a need-to-know basis and not shared with anybody who isn't a really good candidate to be the other side of your trade," he explains. "Aqua reads the order management blotters of our buy-side participants, and they never even have to look at a screen or do anything. But they'll get a notice if a potential trade is there."
While algorithmic trading has worked to improve execution quality in terms of price, Foley asserts, it has had a negative effect on block trading in terms of timing. "When a portfolio manager says, 'I need to own it now and can't afford to wait,' too often the other side of that trade is in an algorithm," he says. "The opposite sides of the market should be able to find each other."