Instinet and Credit Suisse announced an agreement to link their respective dark liquidity pools in Japan. Through an algorithm, customers of Instinet's CBX for Japanese Securities and Credit Suisse's CrossFinder will have access to each other's dark pools of liquidity."Dark pools provide numerous benefits, most notably in their anonymity, which protects against the information leakage that often plagues the primary markets in Asia," says Nick McDonald, Head of Asian Equities at Instinet. "The difficulty comes when accessing all of the dark pools creates a workflow issue for clients. While Asia is certainly behind the U.S. in the number of alternative venues available for trading, our clients have expressed interest in linking...thus the partnership."
McDonald adds that the actual linkage between the two dark pools was relatively easy to achieve. "With the broad industry acceptance of FIX, linkages such as these are actually fairly simple. Typically it's completely in less than a day by each organization's FIX team," he explains.
The Japanese linkage is the latest in a slew of recent agreements between Instinet and Credit Suisse. Late last year the two announced a similar agreement to link their U.S. dark pools and in April Credit Suisse announced it would route order flow to Chi-X, Instinet's new pan-European alternative trading system.
McDonald says that Instinet is committed to being an open platform and is actively seeking out partnerships with "all significant ATS pools around the world." Ultimately, any partnership comes down to what customers are asking for and the amount of liquidity an organization can provide.