Buy-Side Technology Awards 2014: Best Buy-Side Execution Venue—Liquidnet

Victor Anderson, Peter McStay and Brian Moore.

This year’s Buy-Side Technology Awards have witnessed a handful of new winners, as well as several former champions retaking the crown. But perhaps in no other category is stability more ensured than that of the best buy-side execution venue, where the more things change, the more Liquidnet takes home the prize. In fact, the institutional trading network founded by Seth Merrin has never relinquished this award, though not for lack of competition—which was provided this year by a strong entry from ITG. Rather, it keeps winning because it has expanded its markets, while never losing the disruptive spirit that made it so handy to buy-side firms to begin with.

Most notably, the trading network took the plunge into fixed income in 2014 with its acquisition of European high-yield bond trading platform Vega-Chi, a venue for buy-side firms to anonymously trade large orders of illiquid bonds directly, minimizing market impact. In a more distant market that nevertheless has seen similar bottlenecks, Liquidnet also continued its concerted effort to open up equities trading in India. By beginning to route trades into the country on behalf of global members this July, the provider’s total markets now number 43 on five continents.

Elsewhere this year, the numbers spoke for themselves. In its established markets, Liquidnet set records for principal traded in Europe over the first half of the year—demolishing the previous record from 2009 by 40 percent, and achieved its single biggest trading day to date on April 8. Record quarterly performance was also realized in Asia. Not content to rest on its laurels, though, the venue is still hard at work leveraging new technology initiatives, and, increasingly, new people. In April, it hired Bob Garrett from Wells Fargo Securities to join as CTO a few weeks after Tabb Group veteran Adam Sussman was tapped as head of market structure and liquidity partnerships.

Cognizant of the current regulatory environment and concerns about market surveillance, in June Liquidnet completed the setting of new transparency controls for all members, who can now better monitor and manage the liquidity sources they interact with, and the Liquidnet products and services in which their data is included. The firm also continues to implement commission-management tools that were announced late last year, which help traders to track commissions against internal research targets, and aggregate commission-sharing agreements and client commission agreements, as well.

Time will tell whether increased scrutiny on dark pools will eventually upend the parameters by which Liquidnet and other execution venues do business. For now, though, the gold standard remains.

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