Liquidnet founder unconcerned about tightened dark pool regulations
By focusing on large asset management firms and with a team driven by passion, Liquidnet has expanded to Europe and Asia-Pacific
The Securities and Futures Commission is tightening regulations on dark pool operators to ban retail investors from trading on the platform, but Seth Merrin, the founder and chief executive of Liquidnet, said he was not worried as his platform served only the biggest asset managers.
Merrin, who set up Liquidnet in 2001 and expanded it to Asia-Pacific in 2007, has always urged his team to focus on serving the largest institutional clients to trade on the company's dark pool platform, which is an electronic trading system that anonymously matches big blocks of buying and selling orders for institutional investors. The turnover of its 11 markets in Asia-Pacific grew 25 per cent year on year this year, with Hong Kong having the largest share at 33 per cent.
Born and raised in New York, Merrin came from a family that has nothing to do with investment or technology. His father and a brother run an art gallery while another brother opened a chain of restaurants. After graduating with a political science degree from Tufts University in 1982, he started his career as a trader at a hedge fund company because his father's friend worked there.
Three years later, he set up his first company, Merrin Financial, at the age of 24 to offer electronic-order routing systems for asset management firms. The business was a success and he sold it to Automatic Data Processing in 1996. In 2001, he set up Liquidnet with 20 staff and 38 clients in New York. The firm has now expanded to Europe and 11 markets in Asia-Pacific, with about 300 staff and 750 clients managing billions of dollars worth of assets.
During his recent visit in Hong Kong, Merrin chatted with the South China Morning Post on how to establish the dark pool and lead a team, given the tough regulatory environment.