Some brokers lack the technological capability and the desire to link their dark pools, according to Rob Maher, head of Advanced Execution Services (AES) sales in Europe, Credit Suisse.
The comment follows Monday’s announcement that Credit Suisse and Instinet have become the first brokers in Europe to allow their clients bilateral dark pool access. Connectivity will be provided via the firms’ smart order routers and algorithmic trading platforms.
“Not all brokers are capable of this kind of agreement, where they have the technology in place to receive and route orders,” Maher told theTRADEnews.com. “Some of it is technological capability and some of it is of a competitive nature. I would like to think more connections will happen quickly, but from my experience in the US, we were having these discussions 3 years ago and it just takes some time.”
On connecting to Instinet’s BlockMatch dark pool, Maher said that past links with the firm facilitated the deal. “We have a strong and historic relationship with Instinet and we have like minds in trying to get our clients the best quality of execution. We have had success with Instinet in the US and Asia for some years now.”
He also confirmed that other similar deals with registered MTFs and dark pools are in the pipeline. “We expect a big part of our work over the next six to 12 months will be spent connecting to more liquidity pools. We expect to be online with between five and 10 of these venues by the end of the year.”
Currently, Credit Suisse has similar deals in place with 29 venues in the US, and four in Europe. These include NYFIX Euro Millennium, Chi-X’s dark order types and now Instinet’s BlockMatch.
Maher hopes Monday’s deal will prompt other brokers to follow suit. “We hope that the deal with Instinet will be a driver for more connections in the industry,” he said. “Ultimately, not connecting to alternative liquidity pools makes it harder for clients to execute and potentially limits their ability to get best execution.”