Appital, the peer-to-peer price discovery and liquidity sourcing technology for asset managers, would like to be established in Europe by the end of this year after reaching $2bn of buy-side liquidity in 2023. 

The firm was launched to automate equities bookbuilding. In order to execute large block trades, buy-side traders historically had to call high-touch sales traders to discuss whether or not to go into the market, which could lead to information leakage. 

In September last year the firm launched Appital Insights, which provides real-time data for buy-side institutions to assess the viability of executing larger orders, above 20% of average daily volume, without alerting the market. Data in Appital Insights provides automated feedback on live positions and on the likelihood of driving liquidity in any relevant name so traders and portfolios can decide whether to launch a bookbuild.

Brian Guckian, chief business development officer, at Appital, told Markets Media: “Traders can go to a portfolio manager with an opportunity for a transaction and save hundreds of basis points by going into the market at the right time. We are promoting that idea of more information sharing between traders to portfolio managers (and Appital provides the mechanisms to allow for this).”

Mark Badyra, chief executive of Appital, told Markets Media, that Appital Insights is now connected directly to a button within traders’ execution management system (EMS) so they can expose multiple orders and receive feedback on the likelihood of execution with their buy-side peers, based on internal analytics at Appital. 

In Appital traders can send 10 or 20 orders and Badyra said that no-one in the market will hear about it because the automated response is purely based on feedback. The platform analyses the order in real time using multiple data points for that equity, such as critical mass and liquidity, which will get better with time as the model learns to identify more patterns.

“Clients are keen to expose orders to Appital Insights as they recognise the uniqueness of not signalling to the market because if there is no matching, there is no execution at this level of platform interaction,” Badyra added. “The buy side has a lot of fear of information leakage and we built Appital with this in mind, so that it is the safest place to send an electronic order.”

After launching Appital Insights in September last year, platform liquidity reached more than $2bn of buy-side liquidity, with $800m notional in November 2023 and $300m on a single day in December according to the firm. In comparison, liquidity had been $200m in the year from August 2022 to August 2023. 

“We can produce a report based on indicative holdings from public data sources, and we can prove the relevance of liquidity in Appital,” said Badyra. “New clients are signing up to a proven platform on proven technology, which is a complete step change.”

Badyra described Appital as “very much a safe space” to send orders of 20% average daily volume or more, and said that the firm has seen orders of up to 24 days volume. He also said that every click is tracked so that asset managers are incentivized not to misuse the platform, because ultimately it will lead to them not being invited to deal flow that they do not have.

Guckian claimed that Appital is creating unique liquidity as some of executions have come from managers creating orders, especially for small and mid-cap stocks.

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Guckian said: “There will be a multiplier effect on liquidity coming through the platform as more institutions get this live functionality in their EMS in the next months.”

He continued that Appital has met with some of the largest global asset managers to discuss how they can partner with the firm in developing their internal mechanisms to enhance positive outcomes. 

“In four years we have gone from concept to launch to reality, and they are moving off the fence because Appital is something tangible that they can interact with,” Guckian added. 

Last December Appital said in a statement that 32 fund managers with $15 trillion in assets under management had signed up, with 55 more in the onboarding stage, managing an additional $30 trillion. 

“We have an additional 60+ clients in the process of onboarding,” said Guckian. “They are global desks using the platform for European equities.”

Many Appital clients have recognised difficulties in trading large blocks in Asia Pacific and the US according to Badyra. Although the US equity market is already very competitive, he argued that in the US, quite a few electronic liquidity providers have very similar workflows. 

“Over the past 10 to 15 years there hasn’t been a step change in a unique workflow coming to market,” he added. 

In  the US, equity investors increased the share of trading volumes executed electronically in 2023, according to Coalition Greenwich. The consultancy said in a report, U.S. Equity Markets 2024: Trends and Opportunities, that electronic trading platforms captured 44% of buy-side U.S. equities order flow in 2023, up from 42% in 2022.

Jesse Forster, senior analyst at Coalition Greenwich market structure & technology, said in the report: “Sourcing natural liquidity remains the buy-side’s primary determinant in allocating a diminishing commission wallet, and desks are reducing their broker lists while concentrating flow to their top providers.”

As many Appital clients are global asset managers, Badyra claimed the firm could probably launch in APAC or the US with 50 or 100 firms.

“At the end of this year we would like to be established in Europe,” said Badyra. “We are in the early stages of meeting with exchanges in APAC and the US rollout is fully scoped.”