Liquidnet seeks to remove buy-side burdens with new platform
Buy-side block trading network Liquidnet has launched a new platform that it says will help to cut down on conflicts that might affect best execution. The move is part of a wider shift as the buy-side seeks to claim more independence from the sell-side.
Called Liquidnet 5, the new platform adds commission management and payments tools to its analytics and execution tools. The idea is to streamline and automate workflows, but also to help buy-side firms manage their commission wallet. Liquidnet is a network of 800 asset managers in the US, Europe and Asia, across which the new platform is expected to be rolled out by the end of the year.
Historically, buy-side firms left a lot of the details of execution up to the sell-side, without necessarily analysing the costs and benefits in much detail. However, in recent years the buy-side has become increasingly aware and standards and expectations have changed as large asset managers seek to ensure they are getting a good deal from the sell-side.
“We are in constant dialogue with our members and we hear first-hand about their changing roles, their need to understand the evolving market structure, and their frustrations and impediments to achieving best execution,” said Seth Merrin, founder and chief executive at Liquidnet. “Traders have become burdened with understanding and evaluating new technologies, venues, and algorithms and now they must manage more administrative responsibilities that don’t necessarily add value to the trading process. With the launch of Liquidnet 5, we have reimagined how we could bring new efficiencies to the trading process through technology, adding value to every trading decision, and eliminating unnecessary administrative burdens.”
Liquidnet has also said it will add point of trade analytics and guidance on optimal trading strategies in the coming months.
Dark pools such as Liqudinet have sometimes proved controversial. Dark pools are trading venues where the participants remain anonymous until after a trade has been completed. The idea is to protect participants from market impact by shielding their identity – making it easier to trade a large block of stock. Dark pools have gained in popularity in recent years, and now account for about a third of total shares traded in the US, according to the Capital Markets Cooperative Research Centre.