Norges Bank Investment Management (NBIM) has become the first buy-side firm to execute a trade using the bookbuilding brainchild recently launched by Appital and Turquoise.
Live as of last week, the pair claim to have created the market’s first algorithmic bookbuilding platform – a significant milestone for the industry, and one that the partnership believes will deliver much-needed improvements to the equity capital market through more efficient liquidity discovery and price formation.
Mutual buy-side clients of the equity capital markets platform and the London Stock Exchange Group’s (LSEG) pan-European trading venue can now access liquidity sourced on Appital’s platform and a single point of access for deal execution via the Turquoise venue, with straight through processing to its network of settlement venues.
It claims to be the first buy-side to buy-side bookbuilding platform to give institutional investors the opportunity to proactively source liquidity: allowing users to create watchlists and then be alerted to liquidity events that are relevant to them. In today’s current landscape of scarce liquidity, this has the potential to offer valuable new channels.
“Unlocking latent liquidity and executing multiple days’ ADV is essential to achieving our investment objectives,” said Emil Framnes, global head of trading and transition at NBIM, with regards to the debut trade. “We welcome Appital’s innovative peer to peer access of hard-to-find liquidity and executing large volumes using Appital Turquoise BookBuilder without market impact or the risk of price erosion.”
The initiative has been heavily supported by the industry, recently receiving an additional £1.7 million from Frontline Ventures and several other angel investors earlier this month, taking its total investment to date to £4.85 million.
The buy-side has also shown keen appetite, with over 30 asset managers signing up as early as December last year to join the platform at launch.
“[It] gives asset managers the opportunity to be proactive, gain access to deal flow opportunities and encourage liquidity in the market,” explained Paul Squires, head of trading for EMEA equities and Henley fixed interest at Invesco, another buy-side user of Appital, speaking to The TRADE.
“It gives asset managers the opportunity to be proactive, gain access to deal flow opportunities and encourage liquidity in the market.”
“Appital Turquoise BookBuilder helps solve a key pain point for asset managers: the need to find, access and execute significant positional movements of multiple days ADV, while minimising leakage or risk of price erosion. It complements the existing trading technology we currently have in the market.”
The go live follows several partnerships in preparation for its launch including with EMS providers FlexTrade, FactSet and TS Imagine, as well as executing brokers Instinet and Bernstein.
“The launch of Appital Turquoise BookBuilder represents a step change for the asset management industry in the way they unlock and proactively drive liquidity in the market, ushering in a new era of automation in equity markets,” commented Appital CEO Mark Badyra on the launch. “From today, the buyside community has greater exposure to deal flow opportunities they have not been able to access before, and investors can interact with like-minded institutions in the liquidity and price formation process.”