Pipeline Trading Systems, a US-based agency brokerage and trading platform operator, has released a new tool to help traders hunt institutional-sized liquidity.
The new tool, called Liquidity Builder, monitors liquidity across multiple US cash equity and options markets and predicts the availability of blocks of 10,000, 25,000, 100,000 and 250,000 shares in the underlying securities. Users will then be able to execute against the aggregated small order liquidity at the national best bid and offer.
“With this new service, we can now help our institutional customers uncover fragmented liquidity across multiple cash equity and options markets that can be aggregated into large blocks and immediately captured at the national best mid and offer,” said Fred Federspiel, CEO of Pipeline. “Our experience of interacting with high-frequency trading in the Algorithm Switching Engine and our acquisition of 3D Markets’ assets have made this service possible. We’re uncovering a treasure trove of information behind the fire hose of quote and trade data, in both equity options and the underlying assets.”
Pipeline purchased 3D Markets, a technology firm specialising in block options, in April 2009.
“Institutional traders are always looking for more block liquidity. As high-frequency trading increases, and the options markets become more automated, we want to be able to tap this liquidity when it can help us reduce transaction costs for our investors,” added Dennis Fox, director of equity trading at Munder Capital Management. “Pipeline’s new Liquidity Builder helps us access that liquidity on our terms: the liquidity is brought to me and I can choose to react to it or decline if the timing/price is not right.”
As well as Liquidity Builder, Pipeline also offers Block Market, its non-displayed venue for trading large orders and an Algorithmic Switching Engine, which allows traders to execute a portion of their large order across a range of dark and lit venues using a number of different algorithms.