[ M A R K E T
are dealer only and while that’s
great for the dealers, the buy-side
are looking for more control and
choice in terms of execution.
Our experience has been if you
see buy-side meeting buy-side,
they are meeting more volume as
indications of interest, and that’s
why I like our model, because it
provides that choice. The process
Turquoise Plato uses requires a
firm up or potential to execute to
move into another system and it’s
unclear what the logic is behind
that. It presents a real risk of price
movement.”
On issue of potential price
movement, Barnes at Turquoise
Plato succinctly explains that one
of the pillars of the Turquoise Plato
Block Discovery is the Uncross
mechanism, which was designed
in collaboration with the buy-side
and sell-side community, and
many consider this as best in-class.
There’s no doubt the Turquoise
Plato block venue has resonat-
ed with the buy-side, with daily
value traded figures and monthly
volumes breaking records on a
seemingly weekly basis throughout
2017. “The execution mechanism
is designed to be uneconomic for
predatory strategies, and inde-
pendent analysis consistently
highlights the quality of Turquoise
Plato Uncross with low price re-
version rates. Even as flow into the
platform has increased significant-
ly since launch, the high quality
and low reversion of Turquoise
Plato Uncross matching remains
resilient,” Barnes adds.
But what of fragmentation and
will all of these new trading venues
survive, say, five years from now?
Market participants and experts in
the block trading space differ on
their opinions of this. Hemsley says
R E V I E W
there was never one single venue
for it now to become fragmented.
It was mainly ITG and Liquidnet
dominating the space and it was
already fragmented between the
banks.
From fragmentation to fishing
Calls from the buy-side for a more
efficient way to trade blocks saw
the establishment of new venues
because trading blocks certainly
wasn’t as efficient as it could have
been. Although, Grob describes
trading blocks as being much like
As this ecosystem
evolves, we expect
the demand for
electronic block
trading to continue
to grow.
ROBERT BARNES, CEO,
TURQUOISE PLATO
|
B L O C K
T R A D I N G ]
trying to fish but with five rods.
The orders are conditional, mean-
ing if you put a conditional order in
all five venues and you find a match
the other side, before you can firm
up you must pull the orders from
the other venues to avoid the risk
of being overfilled. Imagine trying
to whip four fishing rods out of
the water if you get a bite on one
of the rods, before you can catch
the fish… you can see the issue. He
believes this is what contributes to
fragmentation in the block trading.
“What makes these venues
fascinating is that they are condi-
tional and there are very interest-
ing technological challenges in
that,” Grob says. “It contributes
to fragmentation and it will be
interesting in 2018 to see how
this unfolds. Those firms who
understand how they will navigate
blocks with systematic internal-
iser liquidity alongside existing
smart order routers will be in a
position of real advantage in a
world where everyone is on the
hooks of best execution.”
Issue 54
TheTradeNews.com
45