ITG takes Asian trading to next level with launch of new type of dark pool – POSIT Marketplace™
Aims to reduce trading costs in Asia
NEW YORK, March 16th 2010 – Investment Technology Group (ITG), a leading independent broker and financial technology firm, today launched POSIT Marketplace, a new type of dark pool for Asia. The first of its kind, POSIT Marketplace will combine institutional liquidity from POSIT®, ITG’s leading global crossing network, with dark liquidity from some of the largest internalization pools and external venues in Asia.
Bringing down the costs of trading in Asia
POSIT Marketplace is designed to aggregate liquidity and reduce the costs of trading for fund managers and institutional firms. It does so by addressing the three largest cost factors: spreads, market impact and delay costs1.
Launched on the one-year anniversary of POSIT Marketplace in the US, the Asian platform will bring together dark liquidity from multiple sources in the region and aims to replicate the cost savings already delivered in the U.S which averaged 11.5bps across all market caps in Q3 09. With average trading costs approximately 66% higher in developed Asia versus the US2 the cost savings could be even more significant.
Commenting on the launch, Michael Corcoran, ITG’s Head of Sales and Trading, Asia Pacific said: “Fund managers trading in Asia face particular challenges to find liquidity. They can now access multiple regional dark pools from a single source. Using innovative technology, POSIT Marketplace makes the hunt for liquidity simpler, more efficient, and ultimately should reduce costs for fund managers and the investors whose money they’re managing.”
The system is currently available for trading Hong Kong equities, with Australia and Japan to follow.
- 1. See further detail below on how POSIT Marketplace works to reduce trading costs
2. Data taken from ITG’s Q4 09 global trading cost review, available at www.itg.com
ITG is the world’s largest provider of transaction costs analysis for buyside firms. The ITG Peer database includes the aggregated global trading data of these firms, which equates to coverage of approximately 35% of total Asia ex-Japan equity turnover, 18% of total Japanese turnover and 12% of total US turnover.
How does POSIT Marketplace work to reduce the costs of trading for the buyside?
Trading costs are primarily affected by three factors. POSIT Marketplace helps to address them all:
- 1) Spreads – POSIT Marketplace aims to cross orders at the mid-point or better, saving half the bid/offer spread on each trade.
2) Market impact costs – by only executing in dark pools and therefore maintaining pre-trade anonymity, POSIT Marketplace reduces information leakage to the market, a significant factor in managing trading costs.
3) Delay costs – trade cost analysis shows that the largest factor in trading costs is delay, i.e. the amount of time taken to get the order done. By aggregating liquidity across a range of dark destinations, POSIT Marketplace increases the likelihood and frequency of orders being filled, minimizing delay.
Why does POSIT Marketplace improve fill rates for Asian traders?
ITG has a large, global client base trading Asia Pacific equities. POSIT Marketplace aggregates into one place all of this liquidity and offers additional access to external Asian dark pools with their range of buyside, sellside and proprietary flow. Advanced technology with high-speed crossing maximizes the chances of getting fills and brings liquidity together through a single access point.
Investment Technology Group, Inc., is an independent agency broker and financial technology firm that partners with asset managers globally to improve performance throughout the investment process. A leader in electronic trading since launching the POSIT crossing network in 1987, ITG takes a consultative approach in delivering the highest quality institutional liquidity and market-leading execution services, measurement tools, and proprietary data. Asset managers rely on ITG's independence, experience, and intellectual capital to help mitigate risk, improve performance, and navigate increasingly complex markets. The firm is headquartered in New York with offices in North America, Europe, and the Asia Pacific region. For more information on ITG, please visit www.itg.com.
This document may contain forward-looking statements that reflect management’s expectations for the future. A variety of important factors could cause results to differ materially from such statements. These factors are noted throughout ITG’s 2009 Form 10-K and in its Form 10-Qs and include, but are not limited to, the actions of both current and potential new competitors, fluctuations in market trading volumes, financial market volatility, changes in commission pricing, potential impairment charges related to goodwill and other long-lived assets, evolving industry regulations, errors or malfunctions in our systems or technology, rapid changes in technology, cash flows into or redemptions from equity mutual funds, effects of inflation, ability to meet liquidity requirements related to the clearing of our customers’ trades, customer trading patterns, the success of our products and service offerings, our ability to continue to innovate and meet the demands of our customers for new or enhanced products, our ability to successfully integrate companies we have acquired, changes in tax policy or accounting rules, fluctuations in foreign exchange rates, adverse changes or volatility in interest rates, our ability to attract and retain talented employees, as well as general economic, business, credit and financial market conditions, internationally or nationally.