Neonet lights up a new dark algo & adds two new unlit trading venues

20 September 2012

Neonet has released a new ‘dark’ algorithm and additional connectivity options to other dark pools of liquidity venues that are off exchange. The Sigma X multilateral trading facility (MTF) from Goldman Sachs and the Posit venue from ITG join nine existing venues, including SmartPool (Euronext), Turquoise (London Stock Exchange), Xetra MidPoint (Deutsche Börse) and the UBS MTF.

The new executing algorithm automatically scans connected dark pools using parallel execution strategies through a single simple interface. Enhanced safeguarding mechanisms supposedly prevent information leakage as well as unwanted executions, providing further benefit to the user, in the event of a ‘flash crash’ or market signalling intentions.

“In contrast to the name ‘dark’, regulated MTF dark pools have a well-functioning price discovery mechanism,” claims Joacim Wiklander, the chief executive of Neonet, although the venues are under threat from the European Union which is also targeting high frequency trading. Regardless, Wiklander adds that, “with Neonet’s third party provided benchmarking tools, there is as much execution quality valuation and transparency in dark execution venues as in lit.”

“Our new dark algorithm together with our extended access to dark liquidity will enable significant price improvements for our clients without compromising transparency,” he adds.

According to Dr. Robert Barnes, chief executive of UBS MTF, “effective dark trading strategies are important because they enable investors to pursue their objectives while minimising their risks of pre-trade price impact. This is good because it helps them to enhance performance and reduce their net transaction costs. It's also good for the markets, because it encourages investors to send more order volume."

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