Advises Exchange Leaders to Diversify, Differentiate, and Develop a Global Strategy in Order to Compete in Today’s Market
Seth Merrin, founder and CEO of Liquidnet, the global institutional trading network, advised exchange leaders to look for new alternatives over exchange consolidation to compete in today’s global market as part of his opening keynote address at the World Exchange Congress in Istanbul.
Speaking to more than 100 exchange leaders from around the world, Merrin pointed to lessons that could be learned from the airline industry, which shares many parallels with exchanges including strong nationalistic sentiment, a highly competitive environment driven by the entrance of low cost providers, and a record of unsuccessful M&A activity.
“The winners in the airline industry were able to diversify their revenue by selling more to their existing client base, differentiate their offering by focusing on a premium customer, and develop alliances to expand their reach globally,” commented Merrin. ”As exchanges have demutualized, it is not surprising that we have seen a focus on high frequency trading and on non-trading services. However, exchanges are missing a significant opportunity to differentiate themselves by not providing a, premium, high margin offering for institutional investors. By catering to the needs of this underserved constituency, exchanges will benefit with increased execution sizes, increased liquidity and a more efficient market where they can attract greater investment from around the globe.”
Merrin further highlighted the role of global alliances, rather than exchange mergers, as a means of better facilitating investment in and out of their countries and serving the global investment needs of institutional investors. Liquidnet’s partnership with the SIX Swiss Exchange, launched last year, is the first time an exchange and a trading network have joined forces. SIX Swiss Exchange members can now direct executable block orders in 2,500 Swiss and other European names to Liquidnet’s global trading network which includes more than 630 asset management firms who collectively manage $12.4 trillion in assets. Since launch, it has quickly become the largest exchange operated dark pool in Swiss equities, with turnover on the SIX Swiss Liquidnet Service (SLS) topping CHF1.17 billion, with an average trade size of CHF708,434, more than 60 times larger than any other MTF and exchange (dark or lit) as of February 2012.
Christian Katz, CEO, of Six Swiss Exchange commented, “Through this partnership, Liquidnet and SIX Swiss Exchange have created a unique offering for the market. Our members are not only able to access more quality block liquidity, but also realise the benefits of significant price improvement and reduced market impact on large orders. By working with Liquidnet, we are further internationalizing our exchange whilst underlining our position as the independent investment network of choice for our members. We look forward to the continued success of the offering as we look to expand access to additional markets.”
Liquidnet is the global institutional trading network that connects over 700 of the world’s top asset managers to large-scale equity trading opportunities across the globe — 41 markets across five continents. With an average trade size of more than 44,000 shares in the US, 68,800 in Canada, and approximately $1 million in Europe, Africa and Asia Pacific*, Liquidnet is a leader in large block trading globally. Liquidnet does this by going beyond what the retail market can provide by defending and securing the integrity and the anonymity of the block trade while continuously looking for ways to bring in new sources of safe, actionable liquidity from asset management firms, exchanges, brokers and corporations. Asset Managers rely on Liquidnet to help them protect the performance of their portfolios by allowing them to enter and exit their portfolio positions more efficiently. For more information on the Liquidnet community, its liquidity, block executions, and additional investment capabilities, visit www.liquidnet.com.
Melissa Kanter, Liquidnet
Global Marketing & Communications
+1 646 660 8469
*as of 1H 2012
©2012 Liquidnet Holdings, Inc. and its subsidiaries. Liquidnet, Inc. is a member of FINRA/SIPC. Liquidnet Europe Limited is authorized and regulated by the Financial Services Authority in the UK, is licensed by the Financial Services Board in South Africa, and is a member of the London Stock Exchange and a remote member of the Warsaw Stock Exchange and SIX Swiss Exchange. Liquidnet Canada Inc. is a member of IIROC and a member of Canadian Investor Protection Fund. Liquidnet Asia Limited is regulated by the Hong Kong Securities and Futures Commission as a licensed dealer and a provider of automated trading services pursuant to the Securities and Futures Ordinance and is regulated by the Monetary Authority of Singapore as a Recognized Market Operator. Liquidnet Japan Inc. is regulated by the Financial Services Agency of Japan and is a member of JSDA/JIPF. Liquidnet Australia Pty Ltd. is registered with the Australian Securities and Investment Commission as an Australian Financial Services Licensee, AFSL number 312525, and is registered with the New Zealand Financial Markets Authority as a Financial Service Provider, FSP number FSP3781.