Virt-x and Nyfix to launch block trading service for Swiss blue-chips
04 December 2007 | 6703 views | 0
Virt-x, the London-based securities exchange and subsidiary of SWX Group, and Nyfix have signed an agreement to jointly deliver a non-displayed block trading service for Swiss blue-chip equities. The service will be owned and operated by virt-x and powered by Nyfix Euro Millennium, the neutral multi-lateral trading facility (MTF) scheduled to launch in the first quarter of 2008.
The block trading service will be introduced in mid-2008, subject to regulatory approvals. It will be open to all professional market participants globally, and will offer a continuous matching pool for wholesale orders. Bids and offers will not be displayed to the market. Executions will be anonymous and cleared via virt-x's existing clearing and settlement infrastructure. The existing public limit order book service operated by virt-x remains unchanged.
Lee Hodgkinson, virt-x CEO, points to recent analyst figures that say dark pools, including independent block-trading platforms, broker-dealer crossing engines and utility models, account for about 15% of all U.S. equities market share as of Q3 2007. He believes that while such platforms are in their infancy in Europe, that we can quickly expect similar volumes in non-displayed trading to emerge.
The new service will launch at around the same time as Project SmartPool, an initiative from transatlantic exchange operator Nyse Euronext in partnership with HSBC and BNP Paribas to establish an electronic block trading platform for European listed stocks, and Turquoise, which plans to offer both a transparent order book and anonymous block trading.
Hodgkinson adds that this initiative, aimed at providing wholesale customers the ability to execute business with reduced market impact at improved prices, is the third step in a strategy he put in place for virt-x when he took the helm last year. Other initiatives include rolling out SWX's new trading infrastructure into virt-x's equity trading arena, and a recent price cut.
Chris Smith, head of Euro Millennium and director of NYFIX International adds: "By providing Exchange members with access to Euro Millennium's neutral pool of non-displayed liquidity in parallel with its existing limit order book facility, virt-x is moving to the forefront in terms of market structure innovation."
The deal will provide a boost to Nyfix's plans to attract liquidity for Euro Millennium in a broad-range of equities across Europe. Smith claims that in the US, where independent dark pools are attracting more flow than exchange or broker-owned ones, that its Millennium ATS platform regularly has liquidity in more than 4,500 instruments. Whereas some of the other platforms that have much large trading volume have much narrower liquidity - just within the S&P 500, for example. Nyfix plans to maintain a similar focus on breadth with its European platform.