09.28.2012

Bloomberg Launches Buy-Side Liquidity Pool

09.28.2012
Terry Flanagan

Bloomberg, the financial data vendor, has launched a new service that enables institutional traders to interact with block-size liquidity on Bloomberg’s equity trading platforms and match orders at Bids Trading, a U.S. block trading venue.

The service, called BPool, is intended to help the buy side source equity liquidity in an increasingly fragmented market structure.

“BPool at its core is a technology solution that enables institutional traders to interact with the liquidity present on Bloomberg’s U.S. equity trading platforms [which include EMSX, SSEOMS, AIM and Bloomberg Tradebook] and match orders in Bids Trading’s ATS [alternative trading system],” said Jim White, global head of operations at BPool.

Some existing block trading system workflows can be inefficient and lead to missed opportunities and suboptimal commission management. U.S. equities markets are highly fragmented and liquidity, especially for large orders (or block orders), is very hard to find.

“Buy-side equity traders want to be able to trade large blocks of shares efficiently and anonymously,” said White. “They also want to find a match for their order, but not miss out on liquidity in the fragmented market place.”

BPool funnels liquidity from Bloomberg’s various trading platforms so traders can capture block liquidity up-stream.

“BPool is an integrated component of our trading platforms so we’re not interrupting the trader’s workflow or requiring them to use anything new,” White said.

The use of technology to tackle emerging regulatory and market structure issues is an emerging theme in capital markets.

“Regulatory risk can often lead to increased innovation, and perhaps even productivity growth,” said Robert Newhouse, chief strategy officer at Victor Securities, a broker dealer.

Specifically, regulatory risk “forces the financial services market to implement technologies that not only address specific regulations, but make it easy to shift workflows based on regulatory change”, Newhouse said.

BPool is designed to help traders optimize liquidity by providing access to Bloomberg’s unique liquidity. “BPool enabled orders can be displayed in Bloomberg’s liquidity pool even when they are being worked by a broker [i.e. the order is committed]” said White at BPool. “If an order can be matched in BPool, it can be pulled from the routed order and matched so the buy-side trader doesn’t miss a trade opportunity.”

Bloomberg, which has made an investment in Bids Trading, says that Bids Trading’s policies are designed to preserve broker relationships as well as bring counterparties together to trade large blocks of shares confidentially and anonymously.

“The injection of Bloomberg’s diverse order flow creates a deep and efficient liquidity pool in an otherwise fragmented marketplace,” said Tim Mahoney, chief executive of Bids Trading, in a statement.

BPool offers a centralized, active and diverse marketplace for traders to efficiently trade large blocks while giving traders the ability to monitor and control their orders from order-entry to execution.

“BPool provides the sell side and buy side a solution to the dual challenges of capturing liquidity in an increasingly fragmented marketplace and managing commission spend,” said White. “Besides liquidity they also want to have the choice to pay, clear and settle with the broker of their choice.”

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