Turquoise’s Block Discovery service launched today with support from more than 10 brokers, which the multilateral trading facility (MTF) attributed to high demand from buy-side firms.
The London Stock Exchange Group-owned (LSEG) pan-European trading platform said it was already seeing greater block trading activity as market participants change their trading practices in preparation for the introduction of new rules in MiFID II.
New caps for trading on MTFs’ dark order books – set at 4% for individual venues and 8% across the market as a whole – will be applied to trades under the reference price waiver and some negotiated trades, but those qualifying for the large-in-scale waiver, used for block trading, will be unaffected.
“We’re witnessing a behavioural shift in the way orders are managed and sent to venues as a result of the dark pool caps in MiFID II,” said James Baugh, head of pan-European sales and marketing at LSEG. “At the beginning of the year, the amount of business on Turquoise that would be qualify for the large-in-scale waiver was less than 5% but is now up to 8.5%.”
From today, buy-side investors can use Block Discovery – which enables firms to place indicative parent orders while still being able to trade elsewhere without the risk of overfilling – via Barclays, Instinet, ITG, JP Morgan, Morgan Stanley, Neonet and Société Générale. Access is expected to be provided by Bank of America Merrill Lynch, Citi, Deutsche Bank and UBS in the coming weeks.
Working closely with the buy-side on the development of Block Discovery has been a key part of Turquoise’s strategy. It has held several buy-side working groups to decide the details of how the service will work to ensure it meets the needs of institutional investors.
Turquoise plans further meetings with its buy-side working group before the end of the year to help fine-tune the service based on initial data. In particular it will review its minimum order size which is currently set at 25% of the large-in-scale waiver level, and expects to increase this over the next year to further bolster the ability to trade in size on Turquoise.