Nasdaq OMX is launching a dark block trading service across its cash equity exchanges in Stockholm, Helsinki, Copenhagen and Reykjavik on 15 November.
The service, called Nordic@Mid will allow non-displayed orders to be traded solely against other non-displayed orders at the Nasdaq OMX Nordic's central order book's best bid offer (BBO), using a minimum order size criteria and with support for limit orders, including a ”minimum acceptable quantity' to avoid partial executions.
It is designed to enable automatic execution for orders that are large but do not meet the MiFID ”large in scale' criteria and therefore would not be subject to the waiver from pre-trade transparency. The large in scale waiver offers a pre-trade transparency exemption for trades of €50,000 minimum if average daily turnover (ADT) by value is less than €500,000, and for trades up to €500,000 maximum if ADT is more than €50,000,000.
“Historically institutional block trading has happened bilaterally between firms outside of the trading system. This is an opportunity for our members and institutional end-investors to move OTC trading onto the infrastructure that we have in place, with trades matched at the best price on the exchange.” said Hans-Ole Jochumsen, executive vice president for transaction services, Nordic at Nasdaq OMX. “Long term we see the need for this as institutional clients try to avoid front running or price impact of large orders.”
Nordic@Mid will cover all shares in the Nordic markets with the exception of Copenhagen where only shares on the OMXC20 index will be covered. For the large cap shares in Helsinki, Stockholm and Iceland the minimum order will be €50,000 EUR (500,000 Swedish kronor, 8,000,000 Icelandic króna) and for other shares €25,000 or the equivalent. The minimum order for OMXC20 shares will be 2,000,000 Danish kroner. The service is expected to be introduced in Norway in Q1 2011, where the Oslo Bors BBO will be used.
The launch is still subject to the final Nasdaq OMX Nordic Member Rules approval in Finland, however Nordic@Mid functionality has received approval from the Committee of European Securities Regulators and local Nordic financial regulatory authorities in all countries.