A new trading venue called Squawker is planning to become the world’s first trading venue based on social networking technology.
Designed for sell-side firms as a platform to help investors who want to trade large blocks of stock, the new platform will enable investment banks, market makers, agency brokers and proprietary trading firms to trade anonymously within a single transaction, once it goes live in Q1 2013.
Normally, trading equities in large blocks is difficult in developed markets, because market fragmentation, small tick sizes and the presence of high levels of high-frequency trading activity all mean that a large order would create too much market impact and be too easily exploited by rivals to be viable on most lit exchanges. The growth of dark trading venues such as block crossing networking Liquidnet and many others across the US, Europe and Asia in recent years can be largely attributed to market participants’ desire to avoid the market impact generated by large trades…
New UK venue to ‘squawk’ sell-side blocks – The Trade
“Around 10-15% of pan-European order flow is traded between brokers in over-the-counter markets and away from lit and dark electronic order books,” Gregory told theTRADEnews.com. “This type of liquidity is not suited to the small sizes traded on exchanges and multilateral trading facilities (MTFs) but is still ripe for automation and greater efficiency.”
Sell-side participants will use Squawker by advertising their trading interests on the system in the form of indications of interest or actual trades. Squawker then hunts for potential matches in its system and sends out invites to negotiate, without revealing counterparty information or depth of interest to either party.
If the two parties decide to enter into a negotiation, they must first agree on the price they want to trade at – such as at the mid-point, VWAP with or without auction volume or a limit price. The buyer and seller finally agree on volume, with a minimum trade size set by Squawker according to the stock’s average daily volume.
“The system allows the sell-side to control the information it discloses on a step-by-step basis,” said Gregory. “There is no algorithmic trading in Squawker, which completely eliminates the ability for firms to send in small orders and uncover block trading interest.”
Squawker Targets Anonymous Block Trading with Launch – Waters Technology
Company combines elements of social media technology with compliance and audit trail functionality.
Squawker has announced the launch of its block trading negotiation venue for institutional clients, which fuses anonymized orders with social media technology.
Regulated by the UK Financial Services Authority (FSA) and based in London, Squawker secured series A private investment eight weeks ago. The platform itself, which has a tenative go-live date for the first quarter of 2013, operates with a primary emphasis on human interaction. Trades are negotiated anonymously through the platform, while the ability to evaluate a counterparty adds in a new dimension to operations. Traders will be able to set parameters regarding elements such as failed trade numbers, for instance, to source preferred archetypes of counterparties.
Squawker trading venue eyes early launch – FT Trading Room
‘Christopher Gregory, co-founder and chief executive of Squawker, told the Financial Times that many investors remained concerned about placing large blocks of shares onto electronic trading venues – even supposedly anonymous dark pools. Other market participants could “ping” small market orders to buy and ftsell, and work out the size of the block, he said.
“That leaves trading via an inter-dealer broker, but that comes without the benefits of electronic transaction processing, compliance monitoring or audit trail,” he said.
Squawker will let investors anonymously flag up indications of interest online and commit to deals. Mr Gregory, a former executive at Sungard, the US trading technology company, said Squawker was effectively a centralised, interactive, electronic interdealer broker with a compliance trail and audit monitoring.’