Pan-European multilateral trading facility (MTF) Turquoise has named the first six brokers that will participate in its dark liquidity aggregation scheme, to be launched in July.
The six initial ‘liquidity partners’ for the as-yet-unnamed service are CA Cheuvreux, Citadel Securities, Citi, Deutsche Bank, Bank of America Merrill Lynch, and Nomura. The MTF said further partners will follow in the coming months. The scheme will grant Turquoise clients a central point of access to the dark liquidity of these six brokers.
Under the service, liquidity providers will be arranged in ‘networks’ depending on the types of execution services their dark pools will offer to Turquoise clients. For example, brokers whose dark pools are particularly useful for trading large blocks might join one network, while those specialising in smaller algorithmic orders might be part of another.
The first two networks, which will be introduced at the launch of the service, are called ‘Block’ and ‘Flow’. ‘Block’ will have a minimum order size requirement, while ‘Flow’ will not. Liquidity partners can join more than one network.
The initiative was unveiled in May as TQ Channel but Turquoise is currently finalising a new name for trademark reasons.
Turquoise’s sell-side clients will access the networks either through a range of algorithms developed by Turquoise, their own liquidity-seeking algorithms or via traditional voice broking. . “The service is designed to find liquidity across all the firms within the networks,” Duncan Higgins, head of client relationship management at Turquoise, told theTRADEnews.com. “If a liquidity partner is successful at executing orders we will send more quantity to them, and the less successful ones will get less flow. We will automatically re-allocate and rebalance the flow to liquidity partners to maximise execution.”
The London Stock Exchange is developing Baikal, a rival non-displayed MTF and liquidity aggregation service, with the smart order routing element of the project scheduled to go live in June.
Turquoise CEO Eli Lederman said in a statement that the response to the service had been positive, reflecting the need for access to non-displayed liquidity.
“This new service will provide our members with a sophisticated interface to leading trading firms in Europe.
We are pleased that members will benefit from the considerable liquidity these firms offer,” he said. “By combining them, the service delivers both greater liquidity and higher execution rates.”
Yvonne Hansmann, head of EMEA execution sales, Bank of America Merrill Lynch, added, “Having a single point of access to non-displayed liquidity from six major providers is definitely a step in the right direction in the drive to harness fragmented liquidity. As such, Bank of America Merrill Lynch is fully committed to this initiative and we intend to have our liquidity-searching algorithm, Block Seeker, connected as soon as this service is launched.”