Liquidnet hits record Australian volumes
In a market where block trading
is prevalent, buy-side trading network Liquidnet has experienced
record volumes, while the national exchange’s own block trading venue falters.
Last month, Liquidnet’s Australian operations set a new
record, trading close to A$1 billion in member trades. The record comes as
Liquidnet completes its fourth year of operation in the country.
Yet the Australian Stock Exchange (ASX) last month disclosed
its own block trading venue – VolumeMatch – had been “unsuccessful” and its design
and distribution model was now under review. VolumeMatch has a minimum order
size of A$1 million.
In February, Liquidnet said it had one of its largest-ever
liquidity pools, averaging A$2.2 billion per day, representing the positions of
108 unique liquidity providers looking to move large blocks of Australian
A large proportion of Australian investments are contained
in the nation’s mandatory pension and superannuation funds, making block
trading popular in the market.
“For the last four years, we have been providing leading
asset management firms around the world and in Australia with a way to trade
their large blocks on a different scale by safely sourcing wholesale volumes of
liquidity,” said Sam Macqueen, head of Liquidnet Australia. “As our network of
institutions who trade Australian equities continues to grow and the liquidity
they contribute increases, we continue to see our pool and match probabilities
grow exponentially year after year.”
The average trade size on Liquidnet’s venue during the month
was A$1.5 million, in contrast to the average trade size on the ASX in February
of A$7,581. Liquidnet Australia’s network includes 48 domestic asset management
firms that are live and trading on the system.
“The large fund managers and superannuation funds that make
up our network are longer-term focused and highly protective of their alpha
generation capabilities across the entire investment process,” said Macqueen. “As
we continue to see an increase in high-frequency trading, these investors see
value in being able to transact large volumes of liquidity among each-other in
a protected environment that guards them safely from information leakage and
market impact, both of which can significantly erode returns for their clients.”
Chi-X Australia, a Chi-X Global platform that launched to
challenge the ASX in October last year, lost market share in February, accounting
for 0.53% of turnover in the country’s stock turnover, compared to 0.86% in