Agency brokerage and software vendor ITG has launched POSIT Marketplace in the US, which combines the flow in three of its non-displayed offerings with liquidity from external dark pools. The firm is also planning to launch the service in Europe and Asia, although it has not given a launch schedule.
POSIT Marketplace merges the liquidity from ITG’s POSIT Now continuous crossing venue, POSIT Match scheduled crossing network and the ITG Dark Algorithm into a single liquidity source. In addition, the firm now allows any orders that cannot find a match in POSIT’s internal flow to interact with liquidity from around 20 other dark pools. The firm declined to name the external venues.
ITG will not simply route out orders to the external venues. It will use a newly-developed technology, Liquidity Filter, to separate out any ‘toxic’ order flow – orders seeking clues about other traders’ intentions rather than matches – in the external pools to ensure that POSIT orders are only interacting with institutional orders looking for the other side of the trade. Liquidity Filter identifies toxic flow by looking for a series of tell-tale signs, for example smaller order sizes.
The creation of POSIT Marketplace was driven by client demand for more simplicity when accessing dark pools. “They want a product that helps them deal with the increasing fragmentation in the market,” Chris Heckman, managing director at ITG, told theTRADEnews.com. “To achieve best execution, clients need to access multiple dark pools efficiently and carefully. Simply spraying multiple dark pools is inefficient, results in information leakage, leaves a footprint in the market and causes market impact.”
Liquidity in POSIT Alert, ITG’s buy-side-only indications-based system that scrapes the blotters of participating clients to find trade matches, will be able to interact with orders in POSIT Marketplace.
POSIT Marketplace can be accessed using any of ITG’s trading front-ends, including Triton, Radical, ITG Channel, Macgregor XIP, or any third-party execution or order management system.