European Dark-Pool Volume Surges

Terry Flanagan

Three European dark pools have increased their trading volume by more than 100% since last year according to Fidessa.

Turnover at Nasdaq OMX’s Nordic@Mid increased by 217% between the second and third quarters of last year and the same period this year according to Fidessa’s European Dark Trading Analysis report.

“Although positioned at the bottom in terms of total consideration traded, Nordic@Mid has made significant gains in the last six months, more than doubling its turnover,” the report said. “Instinet BlockMatch, Bats Chi-X and Posit also performed well.”

Trading volume at Instinet BlockMatch increased 123%.

This year Nomura, Instinet’s owner, shut down its own European cash equities desks and moved the business into Instinet.

Ben Springett, head of electronic trading at Instinet, told Markets Media that the integration of the two units increased the firm’s relevance with a broader spectrum of existing and new clients.

“We only really completed the migration before summer and as such are in a growth phase. We continue to be on an upward trajectory and expect to have a top five market share in the first quarter of next year,” Springett said.

Bats Chi-X BXE increased trading volumes by 106% and ITG’s Posit by 83%.

Rob Boardman, chief executive of ITG Europe, told Markets Media in an email: “Not all dark pools were born equal. They all have different characteristics, and are therefore suited to different strategies.”

Boardman said liquidity at Posit is concentrated at the mid-point, accommodates block trade sizes and is more weighted to the morning period.

UBS’ MTF maintained its lead for total value and number of shares traded.

In the second and third quarters of this year total consideration in lit and dark markets combined was €4.9bn, 2% more than the same period in 2012. Dark only consideration grew by 45% to €207bn despite the number of stocks trading in the dark only growing by 2% to 2,123 according to Fidessa.

“Dark venues are often a much less expensive option than their lit counterparts, and we have a lot of statistics to back that up. So, volumes are rising as buy-sides look to take advantage of these benefits,” Boardman said.

“Dark volumes in Europe have been increasing for some time as clients have become more comfortable and confident in accessing venues, in part as a result of the improvements in broker routing tools, anti-gaming logic and the ability to carry out meaningful transaction costs analysis,” Springett added.

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