ITG Takes Asian Trading to Next Level With Launch of New Type Of Dark Pool POSIT Marketplace
Investment Technology Group (ITG), a leading independent broker and financial technology firm, launched March 17 POSIT Marketplace, a new type of dark pool for Asia. The first of its kind, POSIT Marketplace will combine institutional liquidity from POSIT®, ITG’s world-leading crossing network, with dark liquidity from some of the largest internalisation pools and external venues in Asia.
Bringing down the costs of trading in Asia
POSIT Marketplace is designed to aggregate liquidity and reduce the costs of trading for fund managers and institutional firms. It does so by addressing the three largest cost factors: spreads, market impact and delay costs.
Launched on the one-year anniversary of POSIT Marketplace in the U.S., the Asian platform will bring together dark liquidity from multiple sources in the region and aims to replicate the cost savings already delivered in the U.S which averaged 11.5bps across all market caps in Q3 09. With average trading costs around 66% higher in developed Asia versus the US the cost savings could be even more significant.
Commenting on the launch, Michael Corcoran, ITG’s Head of Sales and Trading, Asia Pacific said: “Fund managers trading in Asia face particular challenges to find liquidity. They can now access multiple regional dark pools from a single source. Using innovative technology, POSIT Marketplace makes the hunt for liquidity simpler, more efficient, and ultimately should reduce costs for fund managers and the investors whose money they’re managing.”
The system is currently available for trading Hong Kong equities, with Australia and Japan to follow.
Trading cost FAQ:
Where do the numbers about trading costs come from?
ITG is the world’s largest provider of transaction costs analysis for buyside firms. The ITG Peer database includes the aggregated global trading data of these firms, which equates to coverage of approximately 35% of total Asia x-Japan equity turnover, 18% of total Japanese turnover and 12% of total US turnover.
How does POSIT Marketplace work to reduce the costs of trading for the buyside?
Trading costs are primarily affected by three factors. POSIT Marketplace helps to address them all:
1) Spreads – POSIT Marketplace aims to cross orders at the mid-point or better, saving half the bid/offer spread on each trade.
2) Market impact costs – by only executing in dark pools and therefore maintaining pre-trade anonymity, POSIT Marketplace reduces information leakage to the market, a significant factor in managing trading costs.
3) Delay costs – trade cost analysis shows that the largest factor in trading costs is delay, ie the amount of time taken to get the order done. By aggregating liquidity across a range of dark destinations, POSIT Marketplace increases the likelihood and frequency of orders being filled, minimising delay.
Why does POSIT Marketplace improve fill rates for Asian traders?
ITG has a large, global client base trading Asia Pacific equities. POSIT Marketplace aggregates into one place all of this liquidity and offers additional access to external Asian dark pools with their range of buyside, sellside and proprietary flow. Advanced technology with high-speed crossing maximizes the chances of getting fills and brings liquidity together through a single access point.