Reg NMS and MiFID Will Shift Amount of Order Flow Matched in Dark Pools, Impacting Block Trading and Capital Commitment, Says TABB Group Research on Liquidity Management

New York, NY - 2 January 2007

New Liquidity Management Research Available Online Through Smart Trade Technologies

TABB Group in its newest research note, “Liquidity Management: Pushing Automated Trading Beyond Agency Brokerage,” projects that over the next five years equity internalization rates will shift with the amount of flow matched in dark books increasing. This will be caused by Reg NMS in the U.S. and MiFID in Europe making it more challenging and risky to execute equities using more traditional internalization techniques, such as block trading and capital commitment.

According to Matt Simon, research analyst and co-author with Larry Tabb, TABB Group founder and CEO, “This will force more brokers to develop dark pools and centralize their matching and quoting facilities and implement liquidity management solutions to better automate, quote and streamline their internalization/dark-pool execution facilities.”

The research note is available online currently through Smart Trade Technologies, an industry leader specializing in liquidity management systems that enable investment banks, brokers and exchanges to streamline their execution process across multiple-asset classes.
Harry Gozlan, CEO at Smart Trade, says the new report “reinforces what we have long believed, that liquidity management would be the next phase of electronic trading, once customer flow and order flow tools were widely adopted.”

TABB Group believes that as trading strategies grow more complex, “execution paths and order routing for products that firms want to automate within an asset class, such as FX, equity swaps or sovereign debt, will need to be centralized.” Agreeing with the report’s findings, Gozlan says, “as more advanced firms analyze the impact of one product against another and they begin to trade the capital structure or the global macro interest rate environment, it will be a necessity to view the interplay among currencies, interest rates, credit ratings, credit default pricing, corporate debt, sovereign debt, equities and their derivatives.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development