Liquidnet today announced it posted its third consecutive quarter of double digit volume growth in the US, expanded its global footprint to five continents with a record-setting debut in Australia(1), and continued its more than 75 percent year-over-year volume growth in Europe and Canada.
Domestically, volume from Supernatural trades - which get a first look at Liquidnet's average daily liquidity of 5.4 billion shares in addition to access to the public markets - increased 69 percent over the previous quarter (333 million shares v 197 million shares) and had a crossing rate(2) of 26 percent, of which the majority of trades were in the less liquid small and mid-cap names. Supernatural is currently the fastest-growing Liquidnet offering.
- Liquidnet U.S. average daily volume(3) increased 39 percent year-over- year (80.8 million shares v 57.8 million shares) and 11 percent over the previous quarter (80.8 million shares v 72.7 million shares). Liquidnet Members' average execution size increased to 56,200 shares (from 54,400 in the previous quarter) which helped result in Liquidnet executing the 1st or 2nd largest print of the day in 69 percent of names traded.
- Liquidnet H2O(TM) achieved a 32 percent increase in average daily liquidity (2.9 billion shares v 2.2 billion shares) over the previous quarter. This streaming liquidity, fed by multiple third-party liquidity sources, combined with the natural liquidity Liquidnet's Members provide, and brought the collective US liquidity of Liquidnet's two ATSs to a record 5.4 billion shares, a 20 percent increase over the previous quarter (4.5 billion).
- Liquidnet Europe continued its impressive year-over-year growth by posting an 80 percent increase in total principal traded (10.8 billion pounds Sterling v 6 billion pounds). Its European liquidity pool averaged 13 billion pounds daily.
- In addition, it began trading LSE-listed Global Depositary Receipts (GDRs) issued under Regulation-S, expanding Liquidnet's liquidity pool and giving Members access to investment opportunities in 26 new, diverse markets such as Russia, India, Egypt, Taiwan and The United Arab Emirates. In the first quarter, Liquidnet Members traded GDRs of companies in Russia, Oman and Kazakhstan.
- Liquidnet Asia Pacific had its firsts first full quarter of results and posted strong performance boosted by participation from 73 Member firms who traded US$940 million in principal with 92 percent of all trades executing within the spread and 50 percent at the mid-price. The average execution size of US$1.06 million was 53 times larger than the average deal size on the Hong Kong Stock Exchange(4). And, on average, our collective daily trades in a name represent 32 percent of the 10-day average daily volume in that stock.
- The introduction of Australian trading in the region proved the most successful launch of 28 previous markets for Liquidnet, based on Member adoption. Additionally, ninety percent of its founding local Members completing trades within the first two weeks. The quarter ended with A$312 million in total principal traded and an average execution size of A$1.4 million or compared to A$20,700 on the Australian Stock Exchange(5).
- Liquidnet Canada surpassed 200 million shares traded since inception on the way to a quarter that saw a 211 percent increase in year-over- year average daily volume (1.3 million shares v 4 million shares) and a 39 percent increase in share volume over the previous quarter (1.3 million shares v 926,700 shares).
(1) The first two weeks of trading in Australia had the highest ADV in number of shares than any other launch in Liquidnet history.
(2) Crossing rate is defined as the percent of shares executed within Liquidnet (internal) versus the total number of shares executed by Liquidnet (internal and external). The 26 percent crossing rate refers to the rate achieved using Liquidnet's Aggressive and/or Adaptive strategies. A third strategy, Liquidnet Only, by definition has a 100% crossing rate and is excluded from the calculation. When included, the crossing rate for all three Supernatural(TM) strategies (Liquidnet Only, Adaptive and Aggressive) is 63 percent.
(3) Share volume includes trades executed in the Liquidnet Negotiation ATS, The Liquidnet H2O(TM) ATS and portions executed in external public markets.
(5) Data source: UBS estimates