Lee Hodgkinson, CEO of SmartPool, the non-displayed trading facility owned by exchange group NYSE Euronext, expects growth in the European dark pool sector to take place over the long term and believes his platform is well-positioned to stay the distance.
SmartPool announced today that 14 banks and brokers have become members of the platform, including Credit Suisse, Exane, Instinet Europe, ITG, Knight Capital Europe, Neonet, Nomura, Oddo et Cie, RBS, Sanford C Bernstein and UBS.
“Liquidity in the pool is building and customers are achieving an average price improvement of four to five basis points per trade,” Hodgkinson told theTRADEnews.com. “The dark pool industry is still in its infancy and we believe it will take time before it grows and matures.”
Hodgkinson views the backing of a global exchange group as key to SmartPool’s survival in an already crowded dark pool landscape.
“As part of the NYSE Euronext group, we have access to a range of customers across Europe that is unparalleled,” he said. “This stability and backing also means we are guaranteed to be here next year, whereas many of our low-cost rivals may be struggling in the current conditions.”
SmartPool counts J.P. Morgan, BNP Paribas and HSBC among its investors. According to Hodgkinson, the average trade size on the platform is €50,000, five times bigger than primary displayed markets and nine times larger than some MTFs.
The dark pool will be added to the Universal Trading Platform (UTP), NYSE Euronext’s trading engine and single point of connectivity for all its European cash market services, in the near future. Hodgkinson said the UTP migration would bring new functionality to SmartPool, which is due to be announced around September.
There has been a raft of dark pool launches in Europe in recent months. The London Stock Exchange launched the smart order routing segment of its Baikal non-displayed trading platform at the end of June, and multilateral trading facilities (MTFs) Chi-X and Nasdaq OMX Europe both launched dark pools in May. Rival MTFs Turquoise and BATS Europe are due to make their own non-displayed offerings available within the coming weeks.