Low trading activity has led the Australian Securities Exchange (ASX) to announce the closure of its VolumeMatch large order execution system.
According to a notice posted on the ASX website, VolumeMatch will close 10 November.
The platform, which launched in June 2010, had a minimum execution size of A$1 million and segregated proprietary trading flow from client trades.
Its closure follows an admission from ASX earlier this year that VolumeMatch had been “unsuccessful” and that its design and distribution model were “under review”.
VolumeMatch was one of a series initiatives launched by the ASX in response to the introduction of Chi-X Australia on 31 October 2011. Prior to the introduction of a multi-market environment in Australia, the ASX upgraded its technology platform to a new platform supplied by Nasdaq OMX, launched PureMatch, a platform for high-frequency traders, and Centre Point, a mid-point dark trading service.
Market participants have suggested the requirement to separate prop from client flow presented complexities for brokers and were a key contributor to the low volumes.
“ASX responded to competition with VolumeMatch, among other initiatives, which was evidence of an innovative and evolving market structure,” Ben Valentine, head of electronic execution sales at Citi. “However, it appears that VolumeMatch wasn’t designed in a way that best suited Australian market structure and its participants. On the other hand, ASX’s Centre Point has gained traction since its inception last year with a respectable market share of between 3-4%.”
Centre Point offers anonymous execution at the prevailing midpoint of the best bid and offer of ASX and was enhanced in July with functionality letting market participants stipulate the minimum acceptable fill size for their orders.
Dark pool fragmentation has accelerated in Australia in recent years with a total of 16 broker dark pools and block crossing network Liquidnet now offering dark trading in addition to Centre Point.