Block trading competition on the up downunder
Block trading is proving more
and more popular in Australia, a market characterised by large compulsory
pension funds, as venue operator Liquidnet in May set another record, trading
over AU$1 billion (US$1.02 billion) in member trades.
The global institutional
trading network has been in the country for four years and Q1 this year saw
record quarter-over-quarter growth in Australian equities, up 52%.
“Australia is a standout
success for us as a market but it is also one part of a broader market success
story for Liquidnet,” said Lee Porter, head of Liquidnet Asia Pacific. “Where
others are struggling, we’re building positive momentum in difficult markets.”
In May, Liquidnet’s average
trade size for Australian instruments was AU$1,573,916 – some 224 times the
Australian Stock Exchange (ASX) average of AU$7,007 over the same period,
according to Liquidnet.
“Our recent success has
coincided with the introduction of market competition in Australia which has
highlighted the need to trade in size safely, without information leakage and
without anyone taking advantage of our member’s order size. Performance today
is all about execution,” said James Chatfield, head of Liquidnet Australia.
Alternative trading system
Chi-X Australia launched on 31 October. Six months after launch, Chi-X
Australia already accounted for approximately 3% of the country’s daily volume,
setting a new market share record on 17 May of 3.3%.
ASX strikes back
Competition is heating up in
the Australian market, where in its bid to lure more block traders, the ASX is
launching Centre Point Block as a service from its anonymous mid-spread
matching venue, Centre Point.
From 2 July, Centre Point
Block will let participants nominate a minimum acceptable fill size for
anonymous block orders.
Enhancements to the platform
will also include introduction of ‘sweep’ functionality, which seeks price
improvement in Centre Point for marketable orders prior to routing to the main
market, ASX TradeMatch.
“Centre Point has delivered
over AU$70 million in price improvement to customers since its launch in 2010.
These enhancements will increase the value of Centre Point to our clients by
improving their ability to manage block-sized orders, minimise information
leakage and seek price improvement,” David Raper, ASX general manager of trade
execution and information services. “Centre Point Block will leverage the
significant liquidity already available in Centre Point, which has an average
daily turnover of $100 million across 350 securities. This will ensure that
Centre Point will immediately be a liquid block venue and provide significant
value to the trading community, particularly those looking to execute large