Harborside+ launches large block IOI trading system

Harborside+ launches large block IOI trading system

A group of fund managers have joined to launch Harborside+, a new trading system for matching large block equity indications of interest (IOI).

Harborside, going live after months of pilot-testing with 70 institutions, claims to open up the greatest available pool of liquidity of large block equities by including traders from both the buy- and sell-sides.

Harborside+ president and CEO, Robert Hall, says: "Finding the other side of a large block without causing market impact is a major concern for traders and portfolio managers; our service addresses that problem."

Hall was founder and first CEO of Securities Industry Automation Corporation, executive vice president of the New York Stock Exchange and Thomson Financial's first CEO. He is joined at Harborside+ by a host of industry veterans, including: Seth Gelberg, vice president of technology and CTO, who has previously worked at the American Stock Exchange, Nasdaq, Oracle Corporation, Market Axess and Refco Group; and recently-recruited chief operating officer Michael Cashel, a former senior managing director and head of equity sales at ABN Amro.

Concurrent with its launch, Harborside+ announced the completion of a major round of financing led by Commonwealth Ventures and Mellon Ventures, and participation from NeoCarta Ventures and individual investors.

Traders submitting IOIs to Harborside+ only indicate side (buy or sell) and symbol. Unmatched IOIs are not seen by anyone, including the Harborside+ trading desk. Buyer, seller and Harborside+ trading desk are electronically alerted once the system finds a match, whereupon the service switches from technology to human expertise. The Harborside+ trading desk assists counterparties in finalising the transaction, through phone-based communication that keeps the identities of the buyer and seller confidential.

Harborside's Hall says the blended approach of technology and live support is most effective for successfully trading blocks, and especially in negotiating for larger sizes, accommodating conditional requirements and step-out trades. Trades are executed by Harborside Securities, an independent registered broker/dealer.

Approximately 70 firms have been actively piloting Harborside+ over the past several months, including Birmingham Michigan-based Munder Capital Management, an investment management firm ranked in the top 6% of money managers worldwide with nearly $31.3 billion in assets under management. "Trading large blocks effectively is more an art than a science," says Munder director of equity trading, Dennis Fox. "Technology alone won't solve the difficult trades, and that's why Harborside's trading desk plays an important role."

IOIs may be submitted to the Harborside+ central server in several ways: a firm's order management system via an application interface developed by Macgregor that also supports other OMS vendors including Eze Castle, Charles River Development, LongView and Decalog; a Web-based GUI developed by Harborside+; direct FIX connections; links with FlexTrade Systems, Triad or Tradeware; or by phone to the Harborside+ agency desk.

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