Waters Rankings 2014: Best Crossing Network Provider — Instinet

In addition to its US equities staple, CBX offers buy-side traders access to US options as well as listed stocks in Japan and Hong Kong. It is designed to “sweep” outstanding order flow in the staging blotter of Instinet’s Newport execution management system (EMS), and also incorporates a smart order router and a suite of algorithms from Execution Experts, the firm’s specialist algo trading business that provides institutional investors with an extensive range of standardized and customized multi-asset class strategies. CBX is also capable of sweeping reciprocal liquidity pools, and supports limit, iceberg, hidden, and pegged specialty order types, too.

But perhaps most impressive about these dark pool venues is their design to specific market requirements—for example, “indicative fill” messaging as required in the Japanese market, and a unique US options model that, unlike other dark pools in the asset class, does not require a negotiation process before anonymous trades are made. The latter options functionality has continued to be refined since its initial launch in 2010—in the wake of Instinet’s foundational acquisition of Torc Financial’s technology platform a year earlier—and has grown in importance for options traders and market-makers as the space has further fragmented in the years since.

In some ways, the award for Instinet is a long-time coming—having been narrowly outdone by Liquidnet and NYSE Euronext in 2012 and 2013, respectively. Whether greater attention on low-latency trading produces further regulation for dark pools in coming years or not, CBX’s victory proves that the need for an expertly designed crossing network not only remains, but has grown substantially since Continuous Block Crossing—as the matching system was originally called—was introduced more than a decade ago, in 2003.