'No conflict' with London exchange

PUBLISHED : Monday, 21 May, 2012, 12:00am
UPDATED : Monday, 21 May, 2012, 12:00am


While Singapore's attempt at the first exchange-backed dark pool came to naught, the London Stock Exchange has proved traditional bourses and dark pools can indeed work together.

While Chi-East, the dark pool owned by the Singapore Exchange and Chi-X Global, folds this week, the London Stock Exchange has been successfully running its own dark-pool platform for institutional investors for four years.

London Stock Exchange chief executive Xavier Rolet said that these two type of markets could complement each other. Unlike Hong Kong Exchanges and Clearing chairman Ronald Arculli, who is lobbying to tighten regulation on dark pools, Rolet says the London exchange's dark pool has benefited it.

'I do not see any conflict. They provide more choices for our investors. They are both very successful and are not in competition. The dark pool allows institutional investors to trade large blocks in an efficient way,' Rolet said.

Other independent dark-pool operators also said their businesses had not been affected by the poor global market sentiment.

Lee Porter, head of Asia Pacific at Liquidnet, the largest pool operator in Asia, said: 'Dark pools like Liquidnet have become a mainstay in Asia and are part of an institutional trader's toolkit, as they have proven essential in sourcing liquidity in an anonymous, secure environment.'

Liquidnet had average daily liquidity of US$9 billion available to members last month, while its average execution size per trade is approximately US$1.1 million. It traded more than US$5 billion in the first quarter on its Asia-Pacific platform.

Glenn Lesko, Asia chief executive of Instinet, an alternative-trading venue operator, said its dark pool had been working well. 'I see significant growth in demand for our own dark pool, Hong Kong CBX, as well as for our dark pool aggregation technology, Nighthawk. Clients definitely see the benefits of using dark pools to find additional liquidity and price savings, vis-a-vis the main markets.'

Chris Jenkins, managing director of TORA, another dark-pool operator in Asia, said: 'Alternative liquidity pools are clearly here to stay, as institutions and end-investors appreciate the benefits of improved investment performance.'