Nyse Arca is to add liquidity to buy-side block crossing network Liquidnet, as traditional exchanges and dark pools trend towards convergence strategies. The agreement gives Liquidnet's 552 global buy-side members protected access to liquidity at the Nyse Arca, while preserving the confidentiality of orders placed on the network. Market participants will be expected to realise significant price improvements as orders are executed at the mid-point between the bid and ask spread.
The link-up between the two comes as traditional exchanges seek to build their own dark pools in an effort to retain market share in the face of fierce competition from new entrants. Deutsche Borse this week launched Xetra MidPoint, a new trading service, for large block orders that runs in parallel to its open order book. The London Stock Exchange, meanwhile, has been forced to set back the launch of its own dark pool project until the second quarter of next year following the collapse of its initial joint venture partner Lehamn Brothers. Nyse Euronext, which earlier this year previewed plans for a new dark pool release in the second quarter, dubbed SmartPool, has also pushed back the launch date until early next year.