Baikal, the London Stock Exchange’s (LSE) non-displayed equity trading venue, will launch a smart order routing (SOR) service developed with technology vendor Fidessa before its order book goes live in June.
Lehman Brothers was the original technology partner for Baikal, but the LSE was forced to look for new partners when the US investment bank collapsed last September.
Baikal’s SOR functionality is intended to provide market participants with a one-stop shop for navigating fragmented liquidity across Europe. According to Baikal, launching the routing component first will enable the platform and its participants to establish the links required for liquidity aggregation on Baikal’s order book, which will be underpinned by the technology of the LSE’s existing TradElect platform. Fidessa has also been selected to develop Baikal’s order management system.
Settlement agent BNP Paribas Securities Services will provide Baikal’s customers with integrated settlement regardless of which venue executes the trade. Once the Baikal order book is launched, CC&G, the London Stock Exchange Group’s clearing house, will provide a pan-European clearing service.
Baikal will use MiFID’s price reference waiver, which requires prices to be obtained from a widely published and reliable source, to retain pre-trade anonymity of orders. To disseminate and source this market data, Baikal will use connectivity provider QuantFEED.
In addition, market surveillance services will be provided by SMARTS, which will monitor real-time activity on the non-displayed order book and build on the current SMARTS system used on the LSE’s main market.
“We are making good progress towards a phased roll-out of Baikal this year. We are delighted to be working with Fidessa to provide best-in-class order management and liquidity aggregation technology for our customers,” said John Wilson, CEO, Baikal “With this service we are able to offer a MiFID-compliant best execution service that shields customers from the complexity and costs of direct membership of multiple markets and central counterparties.”