Another network allowing institutional investors and brokers to match orders will begin operating in Hong Kong this month. United States-based ITG yesterday announced that its equity matching system, Posit, will be up and running from April 30. Like other electronic communication networks (ECNs), such as Bloomberg's and CLSA Global Emerging Markets' Tradebook system, Posit allows institutional investors to match stock orders among themselves rather than on the stock exchange's platform. What distinguishes Posit from other ECNs is its price mechanics, where neither buyers nor sellers need to indicate a specific price for orders. Instead, trades are priced at the mid-point of the spread between the best bid and offer prices in the open market. The mid-price practice effectively allows those institutional traders who buy and sell frequently to save half of their spread costs, ITG claims. Asad Sultan, chief executive of ITG Hong Kong, said that given spreads for Hong Kong stocks usually ranged from 30 to 70 basis points, Posit could reduce trading costs by 15 to 35 basis points. Apart from the spread savings, the system's anonymity removed market impact and disclosure costs for traders, said Ian Domowitz, managing director of parent company ITG. 'When institutional investors go into the market, the revelation of their intentions moves the market against them. That means they get a worse execution result than if the information does not leak out,' Mr Domowitz said. Mr Sultan rejected concerns that such an order matching platform could eventually present a threat to Hong Kong Exchanges and Clearing. He said trades matched in the Posit system would be reported to the HKEx, so the exchange could still charge levies on the transactions. Instead of competing with the official bourse, Mr Sultan said the company relied on the exchange to function efficiently in order to supply the best possible prices to its system. ITG already operates Posit in the US, Europe and Australia.