Liquidnet has expanded its dark space suite, launching a liquidity-seeking algorithm for equity traders in the US.
SmartDark uses priority routing, combining yield and quality metrics, to generate a liquidity-seeking strategy and facilitate maximum liquidity exposure, Liquidnet explained. This allows users access to venues with larger execution sizes and better price stability, it added.
This solution is in competition with similar products including JP Morgan’s Aqua and Goldman Sachs’s Sonar Dark X, both of which also aim to minimise market impact and capture non-displayed liquidity.
Alan Polo, head of sales and trading for the Americas at Liquidnet, commented: ”Today’s markets remain volatile and complex for buy-side traders to navigate. Although many algorithms in the market boast exceptional performance, the reality is that an algorithm’s effectiveness depends entirely on the quality of the liquidity it can reach.”
At the time of launch, head of electronic trading in the Americas and global co-head of product research and development at Goldman Sachs John Cosenza stated that “Connectivity to a broad set of accessible liquidity venues is now the minimum requirement for liquidity seeking products. In an ever-evolving and increasingly competitive liquidity landscape, the key is to optimise the subset of venue segments best suited for a specific client objective.”
In Q3 2024, Liquidnet reported that equities revenue was up 24% quarter-on-quarter and 18% year-on-year for the first nine months. Growth was driven by increased institutional block market activity, parent firm TP ICAP stated.
Liquidnet Dark currently has an average block execution size of 28,000 shares for all trades crossed by the firm, and an overall block participation rate of 44%.
©Markets Media Europe 2024
