Instinet and Samsung Securities launched Korea's first buy side crossing network on Monday. The KoreaCross anonymous trading platform will be open to all buy side institutions.
"As financial markets around the world continue to experience turmoil, institutional investors are increasingly looking outside of the traditional North American and European markets for alpha," says Christian Chan, Head of Electronic Trading for Instinet Asia.
He says the Korean market, which can be difficult and expensive to operate within, is ready for an anonymous platform like KoreaCross. "The current market structure doesn't cater to the block trader and we expect our existing international base to be excited about this opportunity," says Chan.
KoreaCross will offer a daily pre-market VWAP cross at 8:30 a.m. local time for that day's primary market VWAP. The platform will allow for shortsells and aggregate order flow.
"Clients input an order through either of our EMSs—Newport and Instinet Trading Portal—direct FIX connection or the EMS platforms from Bloomberg, Fidessa, Tora Trading or ITG's MacGregor between 7:30-8:29 a.m. local time," explains Chan. "We run the match at 8:30, and if the other side of the trade is also entered, it is executed and reported at the end of the trading day at the stock's VWAP, which eliminates the possibility of any inter-day information leakage."
Chan adds that the number of EMS platforms accessing KoreaCross is expected to grow.
KoreaCross is owned and operated by Instinet, with Samsung Securities providing clearance and settlement and domestic order flow as the local broker sponsor. "The key was finding a local partner with enough order flow to match up against, and we feel we've found that in Samsung," adds Chan.