The Australian Securities Exchange’s new block trading service was scheduled to go live on 28 June with 23 participants.
The platform, called VolumeMatch, will help institutions transact large orders in Australian stocks, with the aim of reducing market impact and information leakage by allowing members to hunt for liquidity anonymously.
VolumeMatch, which will be open to both buy- and sell-side institutions, will segregate proprietary and client order flow from brokers on an independently audited basis.
Orders sent to the platform must have a minimum value of A$1 million and will derive their prices from quotes on the ASX’s main market, to help limit liquidity fragmentation and protect the price discovery process. All executions will be reported immediately to the ASX.
Participants authorised to trade on VolumeMatch will be divided into three groups: those providing liquidity from both client and proprietary trading flow; those supplying agency-only flow; and those providing proprietary flow.
Of the 23 participants signed up to use the service, UBS Securities Australia is the only firm that has achieved the appropriate segregation standards to date. Ten participants – including high-frequency firms Optiver Australia, Susquehanna Pacific and Tibra Trading – have signed up to the proprietary segment, with the remaining 12 joining the agency-only segment.
The launch of VolumeMatch is one of three new platforms planned by the ASX to combat the imminent arrival of competing execution venues such as AXE-ECN and Chi-X Australia. One of the services, TradeMatch, will cater for the exchange’s existing traditional customers and will be launched in November, while the other, PureMatch, will be a high-frequency friendly order book and is scheduled for launch in Q1 2011.
Competing venues are expected to launch in Australia before the end of the year, following the transfer of trading venue supervision from the ASX to national regulator the Australian Securities and Investment Commission in August.