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 trades.”