Markets operator Deutsche Börse is adding a €100,000 threshold to its Xetra exchange tie-up with Liquidnet after numerous brokers pulled liquidity from the dark pool in recent weeks.
The block trading partnership, which enables Xetra customers to execute with Liquidnet members, in an effort to boost Xetra’s volumes and increase fill rates for its members.
However, volumes on Xetra have tumbled since the service was launched on 29 July, after numerous major brokers pulled out, fearing information was being leaked to Liquidnet members.
In July, Xetra’s dark order book volume was €38.9 million, representing a 0.11% share of the market according to figures from Thomson Reuters Equity Market Share Reporter.
Following the withdrawal of liquidity from a number of brokers, this figure has tumbled to just €3.5 million as of 14 August, a market share of 0.02%, about a fifth of its previous share of the European market.
As a result, Deutsche Börse is looking to introduce a minimum threshold of €100,000 to ensure the Liquidnet link remains focused on block trades.
A spokesperson for Deutsche Börse told theTRADEnews.com: “In order to provide clients a quick and no-effort solution, a specific threshold will be implemented that will prohibit the Block Agent from having any form of insight into the Xetra MidPoint order book for orders with a notional value of less than €100,000.
“The new Block Agent functionality will continue to kick-in for all clients who choose to utilise Xetra MidPoint for trading of blocks and exceed the threshold of €100,000.”
The new threshold functionality is set to be introduced to Xetra in September.
A statement from Liquidnet said: “We’ve had a very positive response from our members about this new offering and the ability to execute large orders and interact with safe, complementary liquidity in the German market through Deutsche Börse.”