Nasdaq OMX Europe, a multilateral trading facility (MTF) for European equities, has announced enhancements to its order routing functionality and dark pool.
From this month, Nasdaq OMX Europe will route orders from its lit order book to non-displayed venues, including NEURO Dark, the dark pool it launched on 11 May. The new functionality will also enable order routing directly from NEURO Dark to other non-displayed markets.
Nasdaq OMX Europe already routes orders to 14 primary exchanges as well as fellow MTFs Chi-X Europe, Turquoise and BATS Europe. Market participants can select which venues to route to by using a range of the MTF’s order types.
In addition, NEURO Dark will use a proprietary European best bid and offer (EBBO) benchmark – calculated by consolidating the best bid and offer price available on the primary markets or MTFs – for determining execution prices on the platform.
Dark pools can retain their anonymity by basing their prices on a reliable reference – usually the primary market of listing – which exempts them from MiFID’s pre-trade data publication rules. Guidance released at the end of May by the Committee of European Securities Regulators (CESR), the body that ensures harmonisation of securities regulation across Europe, acknowledged the use of an EBBO as a dark pool reference price for the first time, given MTFs’ growing share of European equities trading.
According to Nasdaq OMX Europe, using an EBBO will provide clients with a better opportunity for price improvement. Rival MTF Turquoise received approval to use an EBBO for its mid-point dark book in June, and Chi-X is planning to use an EBBO for its dark pool, Chi-Delta.
“In this increasingly fragmented market, firms are looking for more efficient ways to access liquidity,” said Charlotte Crosswell, president of Nasdaq OMX Europe, in a statement. “Extending our routing offering to dark pools will mean that customers can now gain access to both lit and dark venues through one single connection, greatly improving their ability to seek out new liquidity.”
The new functionality will go live subject to regulatory approval by the UK regulator, the Financial Services Authority.