Posit Marketplace, an aggregator of dark pools for equity traders run by Investment Technology Group (ITG), is just weeks away from launching an Australian venue.
It will be run in Sydney by Dion Cooney, who has worked for ITG, a US-based agency broker and financial technology firm, for nearly 10 years, the past five in the New York office.
Cooney moved back to his native Australia in January to take up the position of head of Australian sales in Sydney, reporting to Michael Corcoran, Asia-Pacific head of sales and trading in Hong Kong.
In the US, Cooney saw first-hand the equity market develop and the growth of dark pools and has good experience for this newly created job, says Corcoran, speaking to AsianInvestor this week.
In addition, Corcoran orchestrated the move of Eric Marchesseau from ITG in Europe to Hong Kong last month to take up a new position as head of portfolio trading.
Corcoran expects many new clients to sign quickly for the Australian Posit venue and says ITG is in a final-testing phase. It is due to go live by the end of the second quarter, which is timely, he says, given good awareness in Australia of multiple trading options and dark pools.
Since the region is still in an early phase in terms of the spread of multiple trading venues, adds Corcoran, there is a chance to deliver the benefits of such venues without some of the downsides seen in Europe -- notably, fragmentation and some dilution of liquidity. ITG, as an independent aggregator of dark pools, arguably prevents some fragmentation.
The main benefits of dark pools are that they maintain pre-trade anonymity and can cut trading costs.
Since Posit Marketplace launched in Hong Kong in March, it has secured more than 100 clients and reduced costs by 20% on average.
Most users of Hong Kong Posit are large buy-side, long-only funds, but there are some hedge-fund clients, says Corcoran. They are based in Europe, the US and Asia, but he would give no more details of clients or trading volumes.
As well as buy-side traders, Posit links to several external broker-dealer dark pools, to further improve liquidity.
In Hong Kong, the average price improvement to date on trades crossed within the Posit Marketplace system is 11-12 basis points -- this equates to a cost saving of about 20% compared to the average cost of trading a Hong Kong stock, according to ITG data.
Initial estimates were that Posit could save clients 33% in average trading costs, so has anything not gone to plan? Corcoran says it is on track and that costs in Hong Kong are expected to fall further.