Appital, a peer-to-peer price discovery and liquidity sourcing technology for asset managers, saw “significant” growth in its user base and liquidity on its platform. Appital CEO Mark Badyra spoke exclusively to BEST EXECUTION on the macro factors behind this growth and the future plans for the platform.
The Appital platform liquidity reached US$800 million notional in November, with US$300 million on a single day in December, up from US$200 million for the period between August 2022 and August 2023. Appital Insights, which launched in September and has hit US$2 billion of buy-side liquidity in that time, allows buy side institutions to assess the viability of executing larger orders, above 20% average daily volume (ADV), without alerting the market.
Client onboarding is in part driven by integrations with EMS providers which allow end-clients to originate bookbuilds and receive Appital liquidity opportunities directly into their workflows and trading infrastructure.
Appital Insights liquidity dynamics in Q4 2023 include: the spread of small, mid and large-cap liquidity was even (approx 33% each); the average daily volumes ranged between 20% and 600% ADV; the average notional of each opportunity within Appital Insights was US$18 million.
Speaking exclusively to BEST EXECUTION, Appital CEO Mark Badyra said the US$300 million volume in a single day was due to several factors.
“Firstly, we see an increased platform use as client trust is building, following the initial rollout of our refined workflow. It’s very easy for users to direct live situations to Appital via their execution management system (EMS), following the launch of Appital Insights.”
“Secondly, clients are learning that sending live situations from their EMS to Appital leads to zero unintended consequences and zero market signalling. And, there is no need for a buy side trader to enter the market when it is not favourable for their intentions at that point in time. Appital Insights will provide feedback on this notion. This means that the buy side trader maintains total control of the order, which is paramount,” Badyra said.
“And thirdly, in December we had the MSCI rebalancing window. With the rebalance comes a spike to buy and sell given equities, and Appital Insights offers a unique mechanism to gain exposure on larger average daily volume (ADV) movements, without signalling to the market. Buy side traders can add the full size of their order, knowing that they retain control of the order, even when they then decide to launch a bookbuild in Appital Turquoise Bookbuilder. This also shows that a recognised liquidity spike post a rebalancing window no longer has to focus only on the closing auctions.
Badyra outlined some of the macro reasons behind the growth in the firm’s user base.
“Accessing block liquidity has been a major pain point for the busyide for many years and we have seen the rise of dark pools, LIS venues, Systematic Internalisers (SIs), and other mechanisms to cater for the market for size, crucially without information slippage and the risk of prices moving against you. However, liquidity fragmentation has led to a reduction in trade sizes even on block venues yet asset managers still need to get their business done.”
“We knew there was a need to bring innovation and automation to this market to unlock significant, unique liquidity across small, mid-cap and large-cap stocks. Over the last two years we have built the technology infrastructure to essentially support a new busyide workflow and help firms gain access to liquidity opportunities they have not been able to access before,” Badyra added.
“Integrations with EMS providers and execution brokers have been followed by the launch of Appital Turquoise Bookbuilder. A year on from that we have added Appital Insights, which unlocks liquidity unavailable via traditional electronic trading venues.”
“We have engaged with the buy side all along to make sure that we build a platform that addresses their key pain points: access to hard-to-find liquidity and the ability to execute with minimal risk of price erosion. We have essentially helped the market evolve, in conjunction with our customers, who are now increasing the activity on our platform,” Badyra said.
Appital’s chief business development officer, Brian Guckian, said that while the focus of 2023 has been deepening unique liquidity on the platform, in 2024 the firm expects the asset management community to fully realise the potential of the platform.
Looking ahead, Badyra told BEST EXECUTION: “Today, we have 32 asset managers with $15trn AUM signed, with 55 more in the onboarding stage, managing an additional $30trn AUM. This will lead to a significant uplift in unique liquidity on our platform.”
“Onboarding clients from across various geographies and jurisdictions will be a key driver for us in 2024. We will also continue with technological developments and integrations, to enable an increasing number of buy side firms to gain access to our platform and deepen liquidity for everyone. We will also build out our collaborations with EMS providers as they connect Appital to their live blotters, which means that asset managers have immediate access to relevant Appital liquidity within their workflows,” Badyra concluded.
© Markets Media Europe 2023
