Liquidnet has launched a buy-side workflow to access bilateral liquidity from market makers in Europe, with XTX Markets named publicly as one of four electronic liquidity providers (ELPs) participating. Liquidnet stresses that these new channels will sit outside their multilateral trading facility (MTF) and will not touch the firm’s protected block-crossing network pool.
The agency broker said the initiative consolidates access to market-maker streams via its front-end application and liquidity-seeking algos, offering mid-price and touch executions with configurable, anonymous interaction and monitoring of fill rates and information leakage. According to Liquidnet’s recent ‘Liquidity Landscape’ report, bilateral activity now represents “close to 50%” of European equity volumes, a figure Global Trading believes is exaggerated by the lack of clear post trading reporting and flagging in Europe.
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Gareth Exton, head of execution and quantitative services, EMEA, told Global Trading: “[The workflows] will not directly interact with liquidity resting in the Liquidnet pool. Members will choose to explicitly interact with this liquidity via separate workflows, away from the block crossing functionality.”
In the US, ATS-hosted ‘private rooms’—such as OneChronos’s Nexus and broker-sponsored rooms on Virtu and Citadel Securities’ platforms—have drawn criticism over whether market makers were being admitted without participants’ knowledge and how counterparties were disclosed; by contrast, Liquidnet says its bilateral channel will launch anonymised and remain segregated from its block pool.
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Exton added: “By integrating bilateral liquidity into both our front-end application and liquidity-seeking algo suite, we’re giving our members the tools to access meaningful liquidity with confidence and control whilst helping the market-making community to extend their reach and better control their risk.”
The stream will sit outside the blocking network and trades are meant to happen at the SI limiting concerns about leaked trading axes of large natural flows from institutions.
At launch, only XTX is named publicly as a market maker on this stream; three additional market makers are also involved, but their names remain undisclosed. Liquidnet said that it is in active discussions with all other major liquidity providers.
The first phase of the service will cover equities, with ETFs seen as a potential next step.
