Instinet Releases Nighthawk to Hunt for Dark Liquidity
Instinet, the global agency broker, launched Nighthawk, a stealth liquidity aggregation algorithm that accesses most major pools of dark liquidity. The algorithm simultaneously searches crossing networks or so-called dark books including Liquidnet H20, NYFIX Millennium, Pipeline and Instinet's sources of upstairs liquidity.
Users can also add an ECN sweep module to Nighthawk providing access to Nasdaq's INET, NYSE Arca and the BATS ECN, the release said.
"With dark books growing increasingly popular, market fragmentation has become more of an issue," stated Michael Plunkett, president, North America, Instinet. "While fragmentation has always been a concern, traders now have technologies like Nighthawk to help them access these hidden liquidity pools, but also ECNs, thereby improving their chances to achieve best execution while retaining anonymity," added Plunkett, in the release.
Nighthawk - which is available immediately through Instinet's Newport and Instinet Trading Portal front ends, allows traders to choose among three visibility levels - gray, dark gray and black - depending on their desired execution time frame and visibility preferences.
With trading volumes continuing to explode while average shares per trade plummet, the resulting fragmentation of liquidity makes it increasingly complicated for traders to meet best execution requirements, stated Gavin Little-Gill, research area director at TowerGroup, in the release. "Fragmentation is being further complicated by the increased use of crossing networks and internalization that can make pockets of liquidity invisible or inaccessible to institutions," he stated. "Tools that provide both access and the ability to act against these sources of liquidity change the rules of the game."