A record month of trading by SmartPool saw the NYSE-owned dark trading venue leapfrog BATS Europe and Liquidnet to become Europe’s third-largest non-displayed multilateral trading facility (MTF) in May.
In its best monthly performance to date, SmartPool traded €2.6 billion in May, a 374% increase on the venue’s April matched volume, and also experienced a 357% rise in its number of trades executed.
According to Thomson Reuters, which monitors trading activity across 12 dark pool operators in Europe, €17.85 billion of trading was conducted on non-displayed venues in Europe last month.
Lee Hodgkinson, CEO, SmartPool, attributed the rise in volumes to a combination of factors including onboarding of new customers, increased business from existing customers and the completion of SmartPool’s migration to NYSE Euronext’s universal trading platform (UTP), a single trading engine and point of connectivity for the group’s cash markets. During 2010, SmartPool has also been integrating clients from NYFIX Euro Millennium, the MTF acquired by NYSE Technologies, the commercial technology unit of NYSE Euronext, in Q4 2009. “We believe this level of market share is sustainable. We’ve been working a long time to coalesce liquidity on the platform, so this is the normal course of business for us,” said Hodgkinson.
The leading dark trading MTF in Europe by monthly volume remains Chi-X’s Chi-Delta, which reported turnover of €5.25 billion in May. But SmartPool’s upsurge was accompanied by an increase in business on Turquoise, the MTF bought by the London Stock Exchange in February 2010, which traded €3.57 billion in May, making it the second-largest dark MTF in Europe. Hodgkinson suggested that the rising fortunes of SmartPool and Turquoise was no coincidence. “The economies of scale offered by exchange-backed MTFs are beginning to feed through into these monthly market share statistics,” he said. “By leveraging the NYSE Euronext franchise and substantial client distribution network, no other market operator can match our scale and this advantage is difficult for our rivals to replicate. With liquidity in the pool building, we are well positioned to continue our upward trajectory.”
SmartPool also reported the largest average trade size of the three largest dark MTFs in May. The venue’s average trade size last month was 24% higher than the average across the lit order books of European MTFs and exchanges, 31% greater than Chi-X’s dark book and 63% larger than Turquoise’s. “The larger the execution at the mid-point, the better the result for the end-investor,” added Hodgkinson. “Our ability to conduct executions at large size is in no small part down to trusted working relationships with clients. If we see a particular client’s average execution size falling, for example, we will provide the appropriate information and advice to address that.”
SmartPool, which was launched by NYSE Euronext in February 2009 in partnership with HSBC, J.P.Morgan and BNP Paribas, offers trading in around 2,200 securities across 15 European countries.