UBS plans European dark pool
09 March 2010 | 8583 views | 0
Swiss bank UBS is planning to launch a dark pool multilateral trading facility (MTF) for crossing orders in European stocks.
The MTF, which needs approval from the UK's FSA, will be a non-displayed orderbook and, as a 100% dark liquidity pool, there will be no pre-trade signalling risk or display of any kind.
The platform will feature central counterparty clearing which the bank says will benefit clients by mitigating risk and reducing settlement costs. Executions completed in UBS MTF will be reported post-trade in real time to Markit Boat and the venue will offer mid-point matching based on the price of the primary market.
UBS says the new MTF will be open to external members, implementing an objective membership access and order prioritisation policy. It will operate with segregated management and supervision, maintaining separation from the rest of the firm's execution businesses and other internal trading desks.
The bank already operates an internal crossing network in Europe called UBS PIN but says the new external non-discretionary pool will support access to a wider array of sources of liquidity for its members. A similar system was launched in the US in 2008.
Tim Wildenberg, head, direct execution services, Emea, UBS Investment Bank, says: "For many years UBS PIN has offered our clients very effective crossing opportunities for matching algorithmic orders with other internal client flow. The new UBS MTF will now give clients access to an additional, even more diverse pool of liquidity. Based on our experience with our Alternative Trading System in the US, we believe the MTF will offer incrementally improved crossing opportunities while still providing reduced signalling risk and measurable spread savings."
UBS is following in the footsteps of Nomura, which outlined plans in December to launch an FSA-regulated dark pool multilateral trading facility.