Global institutional trading network, Liquidnet, has reported its Q1 financial figures, which indicated a record performance across Europe, Middle East, and African (EMEA) region and institutional investors, according to a Liquidnet statement.
In particular, Liquidnet’s Q1 2015 saw robust growth in average execution sizes, which grew 31% YoY to $1.64 million. In addition, the average daily liquidity rose 12% YoY to $22.7 billion, with average daily principal traded constituting a jump of 26% QoQ from Q4 2014.
Part of the meteoric rise in Q1 2015 can be attributed to institutional investors that increasingly looked to trade in larger blocks. This was reiterated by Liquidnet’s focus on expanding liquidity opportunities to a growing amount of leading asset managers, now numbering 780.
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A closer look into these Q1 figures suggests an increase in substantiated block trading, which can defined as blocks of shares worth $10 million or larger. Trades of this size increased by 17% QoQ during Q1 2015 from Q4 2014. The augmented demand for block trading came ahead of an implementation of volume caps on certain dark trading under MiFID II, slated to be implemented in 2017.
According to Mark Pumfrey, Head of EMEA at Liquidnet, in a recent statement on the Q1 metrics, “We’ve made a great start to the year in EMEA as institutional investors’ confidence has grown as they look to trade in blocks to minimize market impact.”
“Despite their growing confidence, sourcing quality liquidity continues to be top of mind for investors. Our ability to facilitate trading in size, anonymously between buy side institutions adds significant alpha to fund performance,” he added.
“We are well placed in terms of the volume caps as MiFID II excludes trades that are large in scale from being capped. The vast majority of our trades are executed under the large-in-scale waiver. The focus on execution quality has become increasingly important to institutions under new FCA and EU-wide rules on best execution. The buy side are looking at more sophisticated venue analysis and TCA to review execution quality from venues. Our business model, aligned interest and ability to deliver execution performance is a major reason for our continuing strong growth in Europe.” noted Pumfrey.