The race among the dark pools to top each other's volume figures is heating up. Last Friday, Goldman Sachs disclosed via email that its alternative trading system SIGMA X executed over 100 million shares on a single data, Thursday, May 25th.
According to Goldman, 103 million shares were crossed and the notional value traded was $3.7 billion in 2,837 unique symbols. Average daily volume in the ATS has grown 47 percent month-to-month.This tops NYFIX Millennium's previous record of more than 80 million shares matched on May 2nd as well as Liquidnet's previous record of over 90 million shares on April 26th.
On May 2nd, I compiled some of the record volumes released by NYFIX, Liquidnet and Goldman. In that commentary, Dark Pools Shine the Light on Record Volumes, Richard Franco, director marketing & communications, predicted that we're going to hear more from the dark pools because now they have something to talk about.
What is most striking about the dark pools communiqués is the bold language. "SIGMA X Shatters Record," states this particular email. The last sentence invites participants to place trades. "The liquidity is here, post orders today."
Since the dark pools are changing everyday, the buy-side traders cannot possibly monitor as many as 30 or 40 ATSs on their own. While several of the dark pools are creating linkages with one another, such as Fidelity and Lehman Brothers; Instinet and Credit Suisse, two leading vendors Order Execution Services and Lava Flow (owned by Citi) are working on becoming dark pool aggregators. This can help solve the problem of liquidity fragmentation, but no doubt they smell a business opportunity here. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio