BlocSec, the first Asian dark pool to cater to both the buy side and the sell side launched by CLSA Asia-Pacific Markets this year, has expanded the order size rules for block trades on its proprietary trading platform.
Since launching for Japan and Singapore markets in May, and the Hong Kong* market in August, BlocSec's clients have indicated that the minimum order size of US$1 million has given them confidence in the service's anti-gaming features, however the minimum has precluded opportunities to cross some small- and midcap stocks for which the US$1 million minimum is sometimes too large.
With the enhanced model orders are tested for the US$1 million minimum, but should an order fail validation, a second test is conducted to measure the order against a percentage of average daily volume ('ADV'). This is set at 20% of ADV based on a 30-day moving average to smooth-out the inevitable spikes in volumes for these less liquid issues.
This provides greater flexibility to clients seeking to trade smaller blocks in smaller Asian equities, and maintains the integrity of the service ensuring clients are trading blocks of stock anonymously.
Blocsec CEO Ned Phillips said the enhancements come as a response to client needs: "This development allows us to deliver a broader and more relevant customer service without compromising the anti-gaming principals which
underline our offer."
RCM Asia Pacific Ltd. Head Trader Kent Rossiter said Blocsec had proven to be a reliable and innovative liquidity provider.
"This new development incorporates more opportunities to cross small- and midcap stocks without compromising the excellent anti-gaming aspects of the system. Implementing this extra layer of validation will allow us to post liquidity and cross stocks which the previous US$1 million minimum would have precluded," Rossiter said.
*Please note that in Hong Kong, the BlocSec service is only available to existing clients of CLSA.