With Block Trading on the Rise, Alternative Trading Systems Must Compete to Gain and Sustain Liquidity, Says TABB Group  


Tabb Group – NEW YORK & LONDON  – At the beginning of October 2016, the Financial Industry Regulatory Authority (FINRA) began its monthly initiative releasing new data on block liquidity in alternative trading systems (ATSs). TABB Group’s latest report, “Blocks in the Dark: Trading in Size on ATSs,” highlights the takeaways from this new source of block data and puts it in context in light of historical TABB-reported ATS block liquidity, industry trade size and off-exchange market share.

Research author Valerie Bogard explains that with these added metrics, which are aggregated monthly and released two months in arrears, industry participants can review the percentage of shares each ATS executes using both the traditional share and notional block definition as well as the two different demi-block definitions. Following are key points Bogard has highlighted from the data:

Though the percentage of blocks has increased, block-focused ATSs face challenges in gaining and sustaining liquidity.

  • There is more concentration in the highest-volume ATSs, which have fewer block executions. The top five highest volume ATSs executed 51% of all ATS volume in August 2016.
  • 19 ATSs have less than 5% block volume using the share definition, while 17 ATSs have less than 5% block volume using the notional definition.

 “As more ATS block data becomes available over the coming months, the industry will be able to discover how these trends are really playing out in the ATS landscape,” says Bogard. “It is only with a historical view of ATS block trading that we can truly gain any insight about shifting block volumes and which industry players are best meeting the market’s current needs.”

The research is now available for download by TABB equities clients and pre-qualified media at https://research.tabbgroup.com/search/grid. For more information or to purchase the report, contact info@tabbgroup.com.  

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