Liquidity Insights Series: NZX Dark Under the Microscope
Unveiling the Liquidnet Liquidity Insights
We’re pleased to announce the forthcoming launch of the inaugural edition in our new APAC-focused series, Liquidnet’s Liquidity Insights.
This series is designed to showcase Liquidnet’s leadership and expertise in dark liquidity and Alternative Trading System (ATS) venues across the Asia-Pacific region. The first edition spotlights the evolving market microstructure in New Zealand, including the into the evolving landscape of dark trading in New Zealand, providing valuable insights and implementation implications for market participants. Future editions will expand to cover other key APAC markets such as Japan and South Korea, offering timely, data-driven insights tailored to the region’s unique trading landscape
Key Highlights from the NZX Dark Report
1. Surpassing Expectations: The report reveals that the turnover in NZX Dark has reached 4.3% of total turnover of all trades executed on the NZX (New Zealand Exchange), significantly surpassing the 12-month target of 2%. This upward trend is only expected to continue
2. Aligning with Global Trends: Historically, NZX has seen a high percentage of manual, high touch dark trading. However, the launch of a public electronic dark venue (as opposed to broker dealer dark venues) marks a significant shift, aligning with global developments and modernising trading practices. This move is expected to enhance liquidity, reduce trading costs, increase market integrity and attract more participants to the market
3. Steady Dark Volume: The total dark volume remains steady at around 35% of turnover. Notably however, there is a shift in dark liquidity towards NZX Dark from negotiated trades, highlighting the increasing preference for electronic dark trading solutions
Looking Ahead
As we continue to monitor the shift in composition and overall dark turnover, we anticipate that NZX Dark will attract more liquidity and new participants. Our commitment to collaborating with Members to develop innovative solutions remains steadfast, ensuring we stay ahead in the ever-evolving market landscape.
David Barrett-Lennard, Head of Execution + Quantitative Services Australia