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Nyse Arca to partner with Liquidnet: Knight to launch European dark pool

25 November 2008  |  8068 views  |  0 drop of water

Nyse Arca is to add liquidity to buy-side block crossing network Liquidnet, as traditional exchanges and dark pools trend towards convergence strategies.

The agreement gives Liquidnet's 552 global buy-side members protected access to liquidity at the Nyse Arca, while preserving the confidentiality of orders placed on the network. Market participants will be expected to realise significant price improvements as orders are executed at the mid-point between the bid and ask spread.

The link-up between the two comes as traditional exchanges seek to build their own dark pools in an effort to retain market share in the face of fierce competition from new entrants. Deutsche Börse this week beat both Nyse Euronext and the London Stock Exchange to the punch with the launch of Xetra MidPoint a new trading service for large block orders that runs in parallel to its open order book.

The LSE, meanwhile, has been forced to set back the launch of its own dark pool project until the second quarter of next year following the collapse of its initial joint venture partner Lehamn Brothers. Nyse Euronext, which earlier this year previewed plans for a new dark pool release in the second quarter, dubbed SmartPool, has also pushed back the launch date until early next year.

US agency broker Knight Capital is set to further extend competition in the European dark pool space with the launch of its KnightLink off-exchange trading platform. The company has today announced the appointment of Kee-Meng Tan to the newly-created position of managing director, head of the electronic trading group (ETG) in Europe.

Tan joined Knight last spring from CQS Management, a London-based alternative asset manager, where he was an equity derivatives trader. Prior to that, he was head of Emea global execution services at JP Morgan.

Commenting on the initiative, Jamil Nazarali, managing director and global head of Knight's electronic trading group, says: "Knight Link is a proven trade execution service in the US with nearly US$5 billion in average daily dollar value traded in October. We believe the time is right to bring the Knight Link model of access to dark liquidity, high fulfillment rates and low-cost trade execution to Europe."

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