LPS5 - I thought I read somewhere that they were launching today. I'll see if I can find the press release.
I guess their trades don't have a special consolidated tape designation that will identify as they occur volumes traded in their system (as was the case with eVWAP trades and, I thought, for trades made in the Optimark system)? Do you know offhand if POSIT and Instinet trades are separately identified within the consolidated tape, or do they blend in with the rest of the call market? eVWAP has a special designation, but that is because the matches occur before the open and execute after the close at a derivative price. It was a specific requirement of the SEC approval that eVWAP report gross trading volumes in each stock to the tape in the a.m. (before the open), and then report trade by trade executions to the tape in the p.m. (after the close).
I am especially interested to see how Liquidnet handles launching an ATS under the auspices of a B/D, rather than as an exchange facility. I assume it has some bearing on how much flexibility they have in handling credit authorization and clearing issues. I had heard that Bear Sterns was clearing all of Liquidnet's trades, but was unclear up to what credit limit per user, if various buy-side desks are going to forsake in-house clearing and settlement services they now rely on, and how Liquidnet would address credit authorization for trading in the system by 70 some odd users without compromising anonymity. I was also interested in their apparent decision to rely upon web-based telecommunications for order entry and reporting, rather than hard-wiring the larger institutional customers for the sake of greater security. Perhaps that is a required dimension of a system that appears to rely on converting trading volume information available through various OMS systems to try and segregate buy side sellers and buyers who are enrolled in the system into Liquidnet sponsored "chat rooms" to conduct mano'y'mano auctions (or horse trading) of large blocks. Am I close in looking at it in this way?
Lastly, it would be interesting to see what kind of volumes they get out of the box. I would assume they might launch with a more controlled trading period to make sure they have complete electronic integrity before letting loose, but must confess that I don't know that much about how they will orchestrate their ramp-up -- as a privately held company, there is not a lot of information about what they are doing out there. Should be interesting.
Thanks again.
MST |
