Providing the best possible access to liquidity by building the best possible platforms
As the winner of the 2023 European Markets Choice Award for Best Sell-side Equities Trading Desk, Instinet’s BlockCross has come a long way since its European launch in December 2019. Best Execution dives deep into the platform’s history, opportunity, continuity and liquidity ambitions with head of liquidity, Simon Dove.
What is Instinet BlockCross and why is it a strong solution within the market? BlockCross is our innovative desktop interface that allows users to capture opportunistic crossing executions by leveraging conditional order types. With the nimble GUI, users can configure pop-up alerts, respond to natural flow, set auto-execution instructions, blast interest to preferred counterparties, and optimise blocks.
Whether a client simply wants to set up alerts to respond to opportunities or leave the blotter up to monitor opportunities in real time, they can decide how little or how much they want to interact. They can also integrate with Instinet’s advanced suite of algos, and view real-time market analytics. So it’s a combination, it’s a very complementary workflow, allowing natural access to liquidity, and also access to algo-generated conditional liquidity.
What did the Instinet BlockCross EMCA win mean to your firm?
This win is an incredible honour for our firm and validates all the hard work of our teams. As an agency broker, we strive to provide clients with the best possible access to liquidity, by building the best possible platforms. Our number one objective is to achieve the optimal outcome for our clients. And, although this is a European award, I think it’s also important to say that it gives recognition to what a truly great team we have within the Instinet business, globally. We work intensively across regions on the BlockCross platform to give clients in Europe, US, and most recently Asia, an access point to liquidity with transparency around the workflows.
It’s been a challenging year for liquidity. What tools can BlockCross offer to locate blocks in this environment?
We recognise that block liquidity continues to be a critical, yet challenging goal. In Europe, it’s not just a challenge because of the way volume and activity is evolving here, but also because of how fragmented the landscape is and how appealing other regions like the US and Asia can be when we’re dealing with clients with global remits.
While innovation and competition among venues in Europe has been at the forefront of progress for the industry and region, over the years, that has also forced more complexity and fragmentation, resulting in higher costs. At the same time, that has bolstered the role of firms like Instinet, looking to provide solutions that offer access to liquidity in a very complementary way to their own operations. It’s about enhancing workflows, providing alerts to liquidity, or options to trade in a way that they feel more comfortable with.
Around block liquidity, it is important to address some of the challenges in the small and mid-cap space. Over time, we’ve increased our own activity in this area to around 40% of BlockCross’ volumes, which along side an average trade size of $1m on the overall platform, demonstrates the benefit of block crossing in areas where liquidity is hard to find.
We approach functionality innovations in a very client-focused way and that leads us to many of our enhancements. In that context, we now offer clients access to agency IOIs (Indications of Interest). We also look broadly at blotter scraping and order exposure functionality to ensure clients are present in multiple venues and destinations at once, so they don’t miss opportunities and can work an order elsewhere, at the same time.
What are the biggest challenges you face in accommodating the specific demands of equities counterparties right now?
In many ways, the challenge is also the opportunity. We have a very complex and broad client base, and one size does not fit all. Our agility, and ability to tailor to specific client requirements, is valued by our clients.
We continually evolve our platforms to provide clients with complementary workflows. We do the same around our algo offering and our execution consultancy service, as well as, our Analytics and Newport EMS. Transparency and control are top priorities for our clients and we pride ourselves on delivering that in every element of the business that we offer.
This draws on the talent of our technologists, our low and high touch trading teams, as well as from a post-trade capability standpoint, as we innovate in the clearing and settlement space. While Instinet can’t create volume in the market, we can join the dots and give clients access to as many liquidity sources as possible. In terms of post-trade, we can reduce the frictional costs of clients doing business, which can be a dial changing moment in a challenged environment.
How has Instinet continued innovating and growing BlockCross over the past year?
Again, it’s about understanding the client’s needs and delivering an enhanced experience.
BlockCross itself services over 300 buy-side firms and gives access to over 700 traders. It falls within one of our three key business pillars, Liquidity & Crossing, but it also digs deep into another key pillar, our Execution Services offering.
We’re continually looking to offer additive workflows for clients who are seeking hard-to-find or block liquidity. This includes the opportunity to interact with retail, within a venue like BlockMatch.
In Asia, the success of our conditional pool within BlockMatch Asia provided the springboard for us to introduce BlockCross in Asia as well.
How do you plan to meet evolving client needs over the coming year?
Given ever changing regulatory developments, we believe it’s essential that technology is adaptable and context-sensitive for clients, so our team keeps Instinet’s technology nimble. As a firm, we dedicate ourselves to staying focused on addressing client challenges and remaining reliable for them. Our clients will continue to make demands on us and we will continue to innovate and tailor solutions to meet those demands – we look forward to those challenges.
The other crucial element, which plays out not just within BlockCross but across our broader product suite in the Instinet Technology Solutions business, is that clients are becoming more sophisticated about their performance and demand access to more and more high quality data. Whether that may be in real-time, when they’re looking to execute a block trade on BlockCross, or historical data, so we’re exploring innovations around that.
We’re also globalising the BlockCross offering to assist more clients. Initially launched in the US, the demand for BlockCross’ unique functionality and depth of liquidity has grown exponentially ever since and the success led us to our launches in EMEA, Canada, and most recently APAC. Earlier this year, we launched BlockCross in Asia, giving clients there manual conditional crossing capability against Instinet’s global franchise flows in BlockMatch Asia, for the first time.
Our global position as an agency business at scale is relatively unique. That gives us a great opportunity to continue doing what we’ve been doing for over 50 years now, which is delivering liquidity access, unique functionality and human expertise to clients.
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