Agency broker ITG has brought its crossing network POSIT to Indonesia and expects local brokers to add liquidity to the network before the end of the year.
The country’s equities will now be available to trade in ITG’s dark aggregator POSIT Marketplace and block crossing platform POSIT Alert.
The expansion comes on the back of significant growth for POSIT Marketplace in Asia Pacific over the past two years and the launch of POSIT Alert in the region earlier this year.
“We have received strong, on-going client demand for launching POSIT in Indonesia,” said Ofir Gefen, head of research and algorithm consulting, Asia Pacific, ITG. “Unlike other block-crossing networks operating in the market, we can cater for smaller-sized trades. You can now access dark liquidity on algo flow as well as large blocks in Indonesia.”
While a compelling investment prospect, for many international investors Indonesia is a particularly difficult market to penetrate given historically low liquidity and wide spreads.
“At consistently over 50 basis points, spreads in Indonesia are some of the widest in Asia, so in the same way that it has in other countries, we believe POSIT will bring considerable price improvement to the market,” said Gefen. “A number of local brokers have expressed interest in adding their domestic flow. Such an addition – which we expect by the end of the year – would help flow variation considerably.”
This year, POSIT Marketplace has already delivered an average price improvement of 11 basis points on trading in Asia Pacific.
“Whenever we look at launching in new markets, we examine the market structure difficulties – issues such as whether off-exchange crossing is possible, spreads and clearing,” said Gefen, adding Indonesia was a logical choice for ITG’s continuing expansion.
POSIT now covers Japan, Australia, Hong Kong, Indonesia, 21 EMEA countries, the US and Canada, and an additional market in the Asia is expected before year-end.