Institutional dark pool Liquidnet executed its largest ever principal trade in a US-listed security in October, exchanging US$150 million in shares at the touch between two asset managers.
The global buy-side to buy-side platform crossed 2.9 million shares worth US$150 million, and shortly after executed a two million share trade valued at US$102 million in another US name, according to figures from the block trading platform seen by theTRADEnews.com.
Brennan Warble, head of US sales for Liquidnet, who joined the firm from Citi in August, said the record trade showed institutional investors placed a higher value than ever on the ability to cross blocks in an increasingly crowded US trading environment.
“The size of these two trades demonstrates the value that the Liquidnet platform provides to institutional investors who want to be able to access a deep pool of liquidity in order to execute their large trades,” he told theTRADEnews.com.
With the number of US trading venues – including exchanges and alternative trading systems (ATSs) – rising well above 40, the fragmentation of liquidity and need to splice large orders to minimise market impact was an issue that buy-side firms continue to deal with on a daily basis.
“Institutional investors place significant value on the ability to execute blocks with no information leakage away from high-frequency activity,” Warble said.
New solutions
The buy-side is increasingly looking to execute block orders off-exchange, and new initiatives launched in recent months seek to offer buy-side firms new, innovative solutions to trade in size.
IEX, a new, buy-side owned ATS that launched in October, is seeking to offer the buy-side improved execution quality by prioritising agency and riskless principal orders ahead of principal orders when a broker is trading with itself, while also providing free internalisation for brokers that match both sides of a trade.
A new initiative from the New York Stock Exchange, which currently leads the lit venues in market share, trading around 25% of all US equities, also seeks to improve buy-side block trading execution.
In November, NYSE announced its new Institutional Liquidity Program to attract block trades on its system, offering dark execution in orders of at least 5,000 shares of US$50,000.
According to figures from Rosenblatt Securities in its October US securities report published last month, NYSE continues to attract significant block activity with 10.59% of volume executed on the exchange classed as part of a block trade – at least 10,000 shares and US$200,000 in value.