Credit Suisse is determined to forge multiple links between its dark pool, CrossFinder, and those of other US brokers, says Dmitri Galinov, director of Credit Suisse Advanced Execution Services (AES).
“AES would like to get as much liquidity as possible for its clients and we have been very aggressive about approaching brokers to connect to their dark pools and get access for our clients, and about giving other brokers access to our dark pool,” Galinov told theTRADEnews.com. He adds, “According to TABB Group there are more than 40 dark pools now. As a result, AES has heard the demands of the buy-side and sell-side to get all the liquidity possible that is located in dark pools.”
On 13 May, the bank established a link between CrossFinder and agency broker BNY ConvergEx’s dark pool, VortEx. And there could be more connections soon. “We are constantly working on additional connectivity,” says Galinov. He adds that there are three or four dark pools in the pipeline, and although they are not yet live, Credit Suisse is already working on establishing connectivity with them. “When a new dark pool comes out, Credit Suisse AES is usually the first firm there,” he says. “As those dark pools go live we are going to be there from day one.”
Although such connections require cooperation with rivals, Galinov denies that they are rare. He says Credit Suisse has connected to 26 US dark pools, although not all of them have been publicised.
He concedes, however, that there are some difficulties. Galinov points out that although US regulations require exchanges and electronic communications networks to be open and accessible to all participants, dark pools are not bound by the same rules.
“Certain dark pools are closed,” he says. “Unfortunately, under the current regulations, there is no way for us to force somebody to open up. It creates a big inconvenience for our clients but that’s the reality of the regulation.”
Nevertheless, as buy-side demand for access mounts, Galinov feels this obstacle could disappear. “As volume keeps going away from exchanges and into dark pools, and as the dark pools themselves grow more powerful and attract a greater percentage of market share, there will be more pressure from buy-side clients on closed dark pools to open up to us, because it is very inconvenient for buy-side clients.”