Today marks the expansion of anonymous liquidity into Spain as UBS Multilateral Trading Facility (MTF) establishes itself on the Spanish equity markets.
Dark liquidity is experiencing an increase in popularity within high frequency trading circles at the moment, particularly among those utilizing off-exchange trading facilities.
In mid-June this year, TMX Atrium added the UBS MTF to its community for very similar reasons, also with a view toward accommodating European client demand for dark liquidity.
At this stage, it is not certain as to whether the demand for such anonymity in Europe is related to the forthcoming MiFID adaptation of the rulings on trade reporting set out in the Dodd-Frank Act in the US, or whether it arises from traders wishing to protect their existing environment due to concern over potential rulings by regulators in Europe concerning mandatory delays in trade executions aimed at dispelling what the regulators view as disruptive practice by high frequency algorithmic traders, as in the case of German regulator BaFIN.
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With measures being considered by institutional firms as to whether to implement a latency floor which would make the offering unattractive to high frequency algorithmic traders, as is currently being investigated by EBS, the expansion of dark liquidity in Europe is an interesting dynamic.
Further afield, Australian regulator ASIC made a bold step in recognizing dark pools as part of the trading environment and took no detrimental action, a move which could encourage high frequency traders along with brokers wishing to attract them to look closely at the Asia Pacific region to conduct their respective businesses.
This particular alternative venue owned by the Swiss bank allows its members to match orders anonymously in European stocks and will join eight other so-called dark pools in offering trading in Spanish equities from today.