Instinet, a global leader in electronic trading and agency-only brokerage, and Tora, a leading electronic trading platform and liquidity provider for Asia, today announced that the firms have reached a reciprocal liquidity access agreement, allowing Instinet Japan clients to access Tora Crosspoint and Tora clients to access Instinet CBX Asia in Japan.
Joel Hurewitz, Instinet's Head of Asia-Pacific Sales - Broker Dealer and Liquidity, said this type of deal was still uncommon in Asia but predicted they would become more prevalent as the Asian markets continue to fragment. He also noted that Instinet, in keeping with its global policy of reciprocally linking its liquidity pools with other significant platforms, plans to connect to several other pools in Asia by the end of the year.
"As the number of liquidity destinations in Asia grows, the buy-side will demand solutions that can optimize the benefits of the disparate liquidity while at the same time limiting the risk of access," he said. "Reciprocal liquidity arrangements will become increasingly important in achieving this. Effective solutions require a combination of diverse client liquidity, connectivity to other market participants and the aggregation technologies to efficiently maximize liquidity. Instinet is optimally positioned in all these areas and has a global tradition of aggregating liquidity that leverages the trust of our agency-only model, client liquidity and advanced technology."
Tora COO Ian Lombard said the hunt for liquidity and execution quality are the key challenges facing the buy-side in Asia.
"That simple fact is that the buy-side doesn't have the resources - or desire - to sift through venues and piece liquidity together themselves," he said. "TORA Crosspoint has already proven very successful in providing clients with an easy, powerful liquidity solution that works in parallel with their everyday order flow. By adding CBX ASIA in Japan as a destination we're offering another new solution to maximise execution quality. Working with other providers like Instinet who share our philosophy is the next step in Asia."
Instinet clients will use the firm's Nighthawk liquidity aggregation algorithm - which allows a single order to access multiple non-displayed trading venues and includes venue analysis and anti-gaming logic - to access TORA Crosspoint.
"Nighthawk is more than a powerful aggregation tool," said Hurewitz. "It is intelligent in that it monitors all the venues it's connected to and will move orders away from venues where it isn't getting improved pricing or liquidity, dynamically re-allocating them to places where it is getting best execution. It makes Asia's increasingly complex, multi-venue marketplaces much easier to manage."
Tora's smart order routing technology will connect to Instinet's CBX ASIA in Japan. Tora's SOR technology provides seamless liquidity seeking capabilities for traders.
"Our goal is to provide traders with a product that makes trading straightforward even as the market becomes more complex," said Lombard. "Tora's SOR technology lets traders search for price improvement among the growing number of venues without doing anything beyond sending their order as they normally do."
The two companies plan to extend the agreement beyond Japan to other Asian markets in which they operate liquidity pools over the coming months.