MiFID II drives Liquidnet ‘dark pool’ revenues

Dark poolInstitutional investors looking for better trade execution and larger sizes due to incoming regulations have led to record performance of broker Liquidnet, the company says.

Its record third quarter (Q3) performance in Europe was driven by institutional investors preparing for the new execution environment due to arrive with the Markets in Financial Instruments Directive (MiFID II) in January 2017.

Liquidnet is a brokerage platform described as a ‘dark pool’ because its members can trade anonymously.

In Q3, the average execution size in Liquidnet was $1.5 million (€1.4 million) and total principal traded through the platform climbed to $34.7 billion – a rise of 18.98% year-over-year.

Continental European trades were up in value by 41%, to $2.8 billion in the same timeframe.

“More and more institutional investors are turning to each other to execute large trades with minimum market impact and maximum anonymity,” says Mark Pumfrey, head of Europe, Middle East and Africa at Liquidnet Europe.

He says the current Q4 period has seen four “record breaking $1 billion plus” trading days so far.

High profile lawsuits put dark pools under scrutiny last year.

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