The Singapore Exchange (SGX) and trading platform developer Chi-X Global have agreed to form a joint-venture non-displayed liquidity pool, which they aim to launch in the first half of 2010.
The venture, which will be the Asia-Pacific region’s first exchange-backed dark pool, will initially offer block crossing for SGX-listed equities, and will also trade stocks listed on the national exchanges of Australia, Japan and Hong Kong on an offshore basis.
According to the firms, the joint venture will “implement specific strategies” to attract liquidity to the new pool and lure new capital flows to the Asia-Pacific region.
Chi-Tech, the technology subsidiary of Chi-X Global, will provide the technology for the new trading platform. SGX-listed stocks traded in the pool will be cleared and settled through The Central Depository, Singapore’s national clearing house and central securities depository. The platform will appoint an as yet unnamed pan-Asian central counterparty to clear other trades it executes.
“SGX is pleased to offer Asia the first exchange-backed dark pool, which will complement exchange trading by reducing the market impact of large trades,” said Gan Seow Ann, senior executive vice president and head of markets at SGX, in a statement. “We believe it will be an important block trading venue for Asian markets, attracting new participants and improving the trading environment in the region.”
John Lowrey, CEO of Chi-X Global, added, “Our experience has shown that users are looking for independent, genuinely neutral dark pools with high functionality and deep liquidity, and we believe that this joint venture will be able to deliver just that.”
Chi-X Global operates the Chi-X Europe and Chi-X Canada displayed trading platforms, and plans to set up a similar venue in Australia.
A number of other dark pools operate in Singapore, including pan-Asian broker CLSA’s BlocSec platform and buy-side-only crossing network Liquidnet. The country is also home to brokers’ internal crossing engines, including Credit Suisse’s CrossFinder.