Brokers Cautious About Dark Pools

Press Release

LONDON-(BUSINESS WIRE) –An industry roundtable hosted by Transaction Network Services (NYSE:TNS) has highlighted the uncertainty felt by brokers about trading with dark pools and suggests the cause is simply unfamiliarity with these relatively new trading venues.

Held in Stockholm last week, the event was supported by Turquoise, SEB and Burgundy, and brought together many delegates from various financial institutions, including some of Europe’s leading investment banks, Multi-lateral Trading Facilities (MTFs) and financial services providers. Themed as Dark Pools – Friend or Foe, discussions ranged from the benefits of dark pools to their future progression, with most debate over the risks and challenges involved for Nordic firms trading in un-lit venues.

Alex Walker, General Manager and Senior Vice President of TNS’ Financial Services Division, who chaired the event, said: “There has been a proliferation of dark liquidity pools in Europe over the last year, presenting a significant challenge to traders faced with the need to connect to many of these new liquidity venues. There was clearly a hunger among the Nordic trading community to learn and understand more about the emerging trading venues. The discussions we had at the roundtable proved to be a valuable tool in helping participants understand how they can adapt to this new form of trading.”

Discussions throughout the event focused on what impact dark pools will have on the Nordic market, with most contributors agreeing that the rise of market fragmentation has led to the multitude of dark pools emerging throughout the industry. It was also acknowledged that as potential venues strive to access liquidity, the development of dark pools requires the need for secure and reliable connectivity. Many delegates also agreed that the roundtable had given them a much more detailed and clear understanding of the issues and challenges involved in overcoming the unfamiliarity of dark pools and how to connect with them easily.

Mr Walker continues: “There is a job to be done to raise the awareness of dark pools outside of the City of London. The event has shown that there is a thirst for knowledge for financial market participants throughout the Nordic region to learn about how they can capitalise on dark pools as they consider their trading strategies moving forward. Many are now exploring what role dark pools play within their trading capabilities.

“This roundtable has highlighted that a substantial number of brokers may have been reticent to engage in this un-lit trading activity, due to a lack of understanding. One element which can ease their challenge is by using a secure, robust and reliable connectivity platform, such as TNS’ Secure Trading Extranet, to access multiple venues simply and cost efficiently.”

TNS’ Secure Trading Extranet connects over 1,600 financial community end-points, representing buy-side and sell-side institutions, market data and software vendors, exchanges and alternative trading venues. It boasts over 115 points of presence and provides services to clients in over 40 countries across America, Europe and the Asia Pacific region, with its reach extending to many more countries.

For further information please visit www.tnsfinancial.com

About Transaction Network Services

Transaction Network Services (TNS) is a leading global provider of data communications and interoperability solutions.