Liquidnet, the global agency broker that allows money management institutions to trade large blocks of equities directly and anonymously with significant price improvement and little-to-no market impact, reports a standout debut in Australia.
Since launching locally on 20 February to become Liquidnetâs 29th market, Liquidnet Australia has enabled more than 50 members to trade Australian securities, becoming the countryâs largest buy-side only marketplace.
Members have already transacted over A$200 million in equities, with trades averaging A$1.4 million compared to A$20,700 on the bourse, highlighting Liquidnetâs unique capabilities as a block matching venue.
âAustralian buy-side managers have been among the fastest Liquidnet members globally to embrace the benefits of our system, with 100 per cent of founding local members completing trades within the first two weeks,â said Liquidnet CEO Seth Merrin who is in Australia this week.
âIt is not surprising, considering that Australia is traditionally one of the strongest institutional investment markets in the world, yet until now its investors have been denied a truly buy-side only institutional marketplace. Clearly there is great demand for an anonymous and realtime platform capable of moving large volumes of stock.â
The Australian launch marked the completion of the first-phase of Liquidnetâs Asian roll-out which began on 29 November 2007 in Hong Kong, Singapore, Korea and Japan (offshore). Its success highlights the demand to trade in non-displayed pools of liquidity away from the Central Limit Order Book.
Currently, Liquidnet Australia, operating under an Australian Financial Services licence, routes matched indications to Macquarie Capital Securities Limited for potential execution on the ASX. However, if approved by the Federal Government to operate as an independent market, Liquidnet will be able to directly and in real-time execute all trades identified and matched among buy-side members without the execution risks posed by ASX crossing rules.
âOperating under our own Markets Licence, we would be able to bring further efficiencies to the buy-side, and the millions of beneficiaries for whom they invest funds, because we wonât be restricted by archaic ASX crossing rules that can jeopardise the executions of our members,â Liquidnet Australia co-head Sam Macqueen said.
Macqueen added that the crossing rules had already led to the cancellation of a small number of matched indications.
Stephen Zilioli, Liquidnet Australiaâs co-head, said the responses received from institutions signals a significant change in the execution expectations among buy-side managers who have long had to bear the costs incurred by advertising their order flow in order to find contra-trades.
âLiquidnet helps buy-side traders find and access block liquidity without being penalised for their proactivity,â he said. âBy finding these opportunities, liquidity is created, and we believe our model will aid the overall liquidity of the Australian marketplace.â