NYFIX Launches Euro-Millennium Dark Liquidity Pool
The business plan for Euro-Millennium was developed about a year ago. The new service draws on the functionality of NYFIX Millennium, a dark liquidity pool for trading U.S. stocks, which has been operating for the past seven years. But NYFIX didn't want to just transplant the U.S. trading system to Europe. "We wanted to make sure it met the requirements of our user base in Europe," says Smith.
NYFIX formed an advisory board, made up of buy-and sell-side clients who participated equally in the design, says Smith. Buy-side members include: Allianz Global Investors KAG mbh, Baring Asset Management, JPMorgan Asset Management, Schroder Investment Management and Resolution Asset Management. Sell-side advisory board members are: BNP Paribas Services, CA Cheuvreux, Citi, Credit Suisse, JPMorgan, Merrill Lynch and UBS.
However, NYFIX will also be competing against a slew of other alternative trading venues, such as Instinet Chi-x, Liquidnet and ITG Posit, which are live. and Turquoise, which is not yet operating.
"It is very early in the game," says Sang Lee, managing partner at Aite Group, commenting on the launch of NYFIX Euro-Millennium and proliferation of European alternative trading systems. "The only ones that are operating are ITG Posit and Liquidnet, and there certainly is more room for competition, and Euro-Millennium is one of the many firms that have announced their intention of launching, says Lee. "I would imagine Euro-Millennium will clearly show whether there is a market for additional players," adds Lee.
According to Smith, the key point that differentiates Euro-Millennium from the other dark pools is its neutrality. "NYFIX doesn't have an axe to grind. It doesn't do proprietary trading, and we're open to all participants " both buy and sell-side," says Smith in an interview with Advanced Trading.
One newcomer gaining a lot of notice is Turquoise, because its backers are nine global investment banks. Though its launch has been delayed a few times, Turquoise is assembling its technology partners and is scheduled to go live in September. "It's an impressive list of banks that are backing that up. And if any platform has a potential of altering the competitive landscape over night, I would imagine it would be Turquoise," says Lee.
However, Lee says that while Turquoise and Instinet Chi-X are more of a traditional ECN-like, multilateral trading facility or MTF model, "Euro-Millennium is somewhat following its model from the U.S."
Smith says, "It's difficult to say what Turquoise is going to be when you are in the early stages of design and rollout." Turquoise has indicated it's going to operate a live (order) book and a dark book behind it, notes Smith. It's also not clear yet if buy-side firms have to go through a broker to access Turquoise or whether they can go direct, says Smith. In NYFIX's case, the buy side can go directly into Euro-Millennium, but it's also open to the sell-side.
Smith emphasizes that NYFIX's strength is its openness and it's neutrality. "You could argue that we are probably the first truly open European dark pool," says Smith, noting, for example, that Liquidnet is very buy-side focused. "We're trying to say we support all clients," adds Smith.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
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