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.”