Instinet, a global securities firm and wholly-owned subsidiary of Nomura Holdings, Inc., and Samsung Securities Co., Ltd., Korea's leading investment bank, today announced the launch of KoreaCross, a neutral platform available to institutional investors for the anonymous, zero-market impact trading of Korean equities.
KoreaCross, which is scheduled to go live on April 7, will be the Korean market's first securities crossing network.
"As an agency broker, Instinet has a long heritage of providing independent, anonymous matching platforms, including the launch of the world's first crossing network in 1986," said Joseph Marchal, head of Instinet Asia. "We are pleased to collaborate with an industry leader in Samsung as we extend this expertise into Korea and offer investors the market's first alternative trading venue."
"As the leading investment bank in Korea, Samsung Securities strives for excellence in all of the various products and services we provide to our clients. To this end, we are constantly looking for ways to expand our product set, and therefore it is our pleasure to collaborate with globally recognized securities firm Instinet on KoreaCross," said YK Joo, head of equity sales at Samsung Securities. "This is the first crossing platform of its kind in Korea, and will allow both Korean domestic and overseas institutional investors to execute block trades of Korean securities at VWAP with little to no market impact."
"For many large, block trades, the Korean market can be a difficult and expensive one in which to operate due to its relative lack of anonymity," added Christian Chan, head of Electronic Trading for Instinet Asia. "Given these market nuances and our success with JapanCrossing, both Korean and non-Korean institutional clients have expressed much interest in a joint Instinet-Samsung 'blackbox' platform of this nature for trading Korean equities."
KoreaCross is wholly-owned and operated by Instinet, with Samsung Securities acting as the local broker sponsor and providing clearing and settlement services, as well as domestic order flow.
KoreaCross will operate as a daily, "blackbox" pre-market VWAP (Volume Weighted Average Price) cross, matching buyers and sellers at 8:30 a.m. KST for that day's primary market VWAP. KoreaCross will allow for short sells, and the system will aggregate order flow to allow clients to more easily meet the Korean market's 100 million KRW (Korean Won) minimum order size requirement.
Clients can access KoreaCross through the Instinet Newport EMS (Execution Management System), through one of several third-party trading systems or via direct FIX Protocol connection.
"While still in their relative infancy, electronic and off-exchange trading technologies are rapidly taking hold across Asia," said Sang Lee, Managing Partner at Aite Group. "The introduction of a system like KoreaCross should help further this trend by allowing institutional investors to more effectively trade a market known for its high market impact."
KoreaCross will become Instinet's ninth ATS (Alternative Trading System) platform around the world. In addition to CBX in the United States and Chi-X in Europe and Canada, these include JapanCrossing, a three-times-daily, "blackbox" crossing network, and CBX Japan, a real-time matching platform, both of which are operated under the firm's Japanese PTS license. Launched in 2001, JapanCrossing has become Asia's largest source of off-exchange liquidity, with "hit" (orders with at least a partial fill) and "cross" (orders with a complete fill) ratios among the industry's highest and which sees more than 2.5 percent of the Tokyo Stock Exchange's daily turnover flow through it each day.*
* 2.57 percent in Q4 2007, as measured by Instinet Japan Ltd.