Buy-side crossing network Liquidnet has unveiled a partnership with NYSE Euronext, the global exchange group, aimed at increasing access to corporate issuers for institutional investors.
A new service, Liquidnet InfraRed, will “minimise information leakage at the investment idea level”, said Alfred Eskandar, corporate strategy director, Liquidnet.
Institutional investors that belong to Liquidnet’s trading community will have “on-demand” access to issuers listed on NYSE Euronext, according to Eskandar. “There is a real need to augment traditional research with a new corporate access model,” he added. Although the service is facilitated in part by technology, Liquidnet employs a dedicated team that helps users source meetings with corporate management.
InfraRed is a proprietary desktop application accessed through NYSE’s ‘NYSEnet’ system, which aggregates institutional demand, news sentiment and block trading data.
As part of the information exchange between issuers and investors, facilitated by Liquidnet and NYSE Euronext, listed firms will have access to a ‘sentiment reading’ based on trading activity by Liquidnet members. The reading, which will be available after a 24-hour lag, provides a positive, neutral or negative verdict on stocks derived from price and liquidity levels within the crossing network. “We have been in talks with members for around a year to identify information that would be useful to the issuer, but innocuous for the investor,” said Eskandar.
Issuers will combine the information from InfraRed with other indicators of investor sentiment, said Eskandar, to “better target and better time their communication with investors”.
“We have always looked for opportunities where technology can be used to greatly improve efficiencies for businesses in the investment sector,” said Seth Merrin, CEO, Liquidnet. “We believe that this new model will mitigate the inherent conflicts that often arise in servicing both the portfolio managers at our Member firms and NYSE Euronext’s corporate issuers.”
The two firms have signed an exclusivity agreement for the next 12 months, but Eskandar did not rule out Liquidnet entering similar partnerships with other exchanges in the future. “This will be a global offering. We have institutional investor clients on four continents and they all have similar needs,” he said.