Buy-Side Technology Awards 2017: Best Buy-Side Execution Venue—Liquidnet


Can anybody stop Liquidnet? In the 10 years that the Buy-Side Technology Awards have had a category for the best buy-side execution venue, there has only been one winner. This year, the venue operator adds another gong to an already laden shelf, even as it prepares to undergo one of the most radical transformations in its history.

It’s been a busy year for Liquidnet, which has not only devoted huge resources to the incoming changes in market structure in Europe due to the revised Markets in Financial Instruments Directive (Mifid II), but has also introduced its Algo Ranking Model to the European marketplace after a successful launch in the US, reported record quarters of growth for Liquidnet Fixed Income, and has expanded into new areas through its May acquisition of OTAS Technologies. “OTAS is a big departure for Liquidnet, in the sense that our focus as a business has been, historically, very much looking to find natural liquidity and opportunities to trade, and to make markets more efficient on the trading route,” says Mark Pumfrey, head of EMEA at Liquidnet. “We have never played a part at all in the other big challenge that institutional traders face—the enormous information overload without the ability to necessarily understand what’s important and what is not.”

While the integration of the analytics vendor is ongoing, Liquidnet is keenly aware of the opportunities afforded by Mifid II and other changes in both market structure and trading behaviors that OTAS can capture. Pumfrey describes conversations with its embers about the acquisition as “amongst the most encouraging and exciting things I’ve seen in my time.”

“The other thing about OTAS that’s really interesting, longer term, is that it has very strong applications, not just in the equities world but in other asset classes,” he says. “That’s something we’ll be looking at in the future.”

It’s not just analytics firepower that the OTAS team brings to the table, however. Liquidnet is keen to not only look at how the company’s existing technology can be brought to bear on stock activity and large-in-scale trading, but also how emerging technologies will increasingly play a part in how capital markets operate. Part of this is looking at how artificial intelligence, in particular, will “help our members and institutions deal with the mass of information that’s out there,” he says. “There’s a big focus on how we might innovate and evolve those tools, and the level of expertise that OTAS has brought to bear here is very significant.” 

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