Trading technology firm ConvergEx has recalibrated its dark algo suite for Asia-Pacific to help the buy-side better access alternative trading systems (ATS) and dark liquidity.
The firm has adjusted its algo strategies to prioritise trading venues that have historically offered the best source of liquidity and lets clients leverage ConvergEx's connectivity to the region's dark pools rather than maintaining their own connections.
In addition, the firm's Abraxas Darkest and Grey algos now access four new dark pools and two new lit venues across Japan, Australia and Hong Kong.
William Capuzzi, president of ConvergEx's Global Execution Business, said the algo revamp would help institutional clients reduce the effects of high volatility and low volume that characterise Asian markets.
"The challenge today is that there are pockets of dark liquidity in electronic format, but they're separate from each other. We're leveraging our relationships with dark pools to help the buy-side access that liquidity," Capuzzi told theTRADEnews.com. "It's not just about looking at what brokers have provided liquidity in the past, you have to look at fill rates and levels of reversion to see what happens after execution when you trade in a particular pool."
The company has also given its customers access to new algo trading strategies in Malaysia, Indonesia and Korea, including reserve, scaling and pegging strategies, and has optimised its Asia-specific benchmark algos.
"Dark liquidity in Asia is still in its infancy, so there can be a lot of liquidity in certain names one day and not the next. Having the ability to also access lit markets provides cover for the buy-side to ensure they get liquidity done, and are not wasting time in dark pools," Capuzzi said.
To select the venues it trades with, ConvergEx analysed successful trades by country, sector, stock and broker to establish which venues provided the best quality liquidity.
ATSs in Japan and Australia continue to grow and grab market share from incumbent exchanges. In Japan, SBI Japannext has emerged as the central competitor to the Tokyo Stock Exchange and reached 3.9% of market share in December.
In Australia, Chi-X Australia – the first venue to compete against the Australian Securities Exchange – traded 11.8% of S&P ASX200 stocks in December 2012, a jump from 9.58% the month prior.