Feb 01, 2012
Bright start for European dark pools in 2012
Dark pool trading rocketed in Europe during
January, with turnover on non-displayed multilateral trading facilities (MTFs) reaching
their second highest total ever, according to data from Thomson Reuters Equity
Market Share Reporter.
Dark MTFs, which include NYSE
Euronext-owned SmartPool, UBS MTF, Goldman Sachs’ SIGMA X MTF and venues
operated by BATS Chi-X Europe and Turquoise, traded €26.81 billion in January,
higher than December’s total of €19.6 billion but just short of the €27.3
billion traded in August. Chi-Delta was the largest dark MTF last
month, trading 21.3% of the total, ahead of UBS MTF, which traded 14.3% of dark
volumes in January.
However, the proportion of dark trading
last month was far more significant, reaching 3.87% of overall European trading
turnover, compared to 2.3% in August and 3.3% in the last month of 2011. August was characterised by high volatility sparked by the European debt crisis
that saw total trading volumes jump to a year-high of €1.14 trillion.
Overall trading volumes in January reached
€690 billion, higher than December’s €586 billion – December is traditionally
a weak month for equity trading due to seasonal variations – but lower than €867.3 billion a year earlier.
Lit trading on major MTFs accounted for
€199.5 billion, broadly in line with previous months, with BATS Chi-X Europe,
the dual MTF that was the result of a recent merger, accounting for over 80% of
alternative venue trading turnover.
Major domestic exchange groups NYSE
Euronext – which runs markets in France, the Netherlands, Belgium and Portugal
– Deutsche Börse, SIX Swiss Exchange and the London Stock Exchange’s UK market, traded a total of €315.7 billion last month, higher than the €276.4 billion
recorded in December but again lower than the €404.9 billion traded a year earlier.
BCN
gains
According to US boutique brokerage
Rosenblatt, which conducts a monthly analysis of dark pool trading in the US
and Europe, Deutsche Bank’s SuperX broker crossing network (BCNs) was the
largest non-displayed trading facility in December 2011, trading €363 million
daily or 0.65% of overall trading for the month. Credit Suisse’s Crossfinder
BCN was in second place, with €354.4 million traded daily (0.63% of overall
trading).
According to Deutsche Bank, the growth of SuperX, which launched in 2010, is due to the growing depth of liquidity available in the system and increased use of its Stealth dark liquidity-seeking algorithm.
BCNs operate under a different regulatory
structure to dark MTFs and are not included in the Thomson Reuters data.
The regulatory structure for BCNs is likely
to undergo a substantial shift as a result of MiFID II, which is currently
being debated by the European Parliament.
Under the new regime, BCNs could be
formally categorised for the first time as organised trading facilities, a new
venue class created by the latest version of the directive, prohibited from using
proprietary capital and be subject to more stringent post-trade reporting
standards. If implemented, the changes are likely to take affect during 2014.
Anish Puaar
+44 (0)20 7397 3817
anish.puaar@thetrade.ltd.uk