Euro Millennium, the European dark pool offering from US trading solutions provider NYFIX, has reported an increase in usage of its platform, which it puts down to a change in buy-side attitudes towards dark trading venues.
On average in September, Euro Millennium reported an average price improvement of 8.47 basis points. Specifically, a 5.9 bps price improvement was reported for FTSE 100 stocks, 17.7 bps for FTSE 250 stocks and 29 bps for FTSE Small Cap stocks. Average share volumes on the platform during September were 1.8 million shares per day.
The encouraging results follow downbeat expectations in Euro Millennium’s Q2 results statement, which predicted losses in the third-quarter of between $2 million and $2.5 million.
Launched in March, Euro Millennium achieved volume highs of around $3 billion in August but has since seen this rocket in September, with over $28.85 billion of available liquidity across 1,000 stocks reported on single days in September.
According to Chris Smith, head of business development at NYFIX, this was due to establishing links with 10 third-party connectivity vendors since the platform’s launch and growth in the use of dark algorithms by buy- and sell-side firms.
Smith also noted a change in the way traders regarded dark venues during periods of volatility after an initial analysis in the first eight months of the year showed an inverse correlation between dark pool use and volatility. “Interestingly, this trend completely subsided in September at a time of increased and significant volatility as institutional clients became more comfortable with the benefits of trading in dark pools,” he told theTRADEnews.com. “While we agree there is a premium on immediacy of execution for some investors in volatile market conditions, there is also a premium on anonymity and minimal market impact."
On 20 October, Euro Millennium executed a record 10.2 million shares and captured significant market share of 3 FTSE 100 stocks: 6.5% in International Power; 1.7% in Prudential; and 1.3% in Vodafone.
Smith considers that, as multilateral trading facilities grow their market share in individual stocks, price formation may migrate from primary exchanges. “There is a growing need to capture this new post-trade and, where applicable, pre-trade information to distribute for industry use,” he said.
“We would absolutely support the introduction of a standardised and consolidated tape, similar to the process that is used today in the US.”