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Instinet Launches BLX Dark Pool

Designed to increase trade size by appealing to trading participants, including both passive block traders and those using algorithmic trading strategies

Instinet has announced that its US agency-brokerage subsidiary has launched BLX, a new algo-friendly dark pool for US equities that ‘builds’ block trades by combining the liquidity aggregation benefits of point-in-time crossing with the flexibility of a continuous market.

Reportedly, with BLX, Instinet aims to restore block-trading in the fragmented US equity market, as the platform aggregates multiple orders from both buy- and sell-side participants and consolidates them into block-size trades. The company has said that given its multi-party participation model, BLX is able to promote anonymity and protect trading information effectively than a peer-to-peer or negotiation trading paradigm. It has added that the BLX market model was designed specifically to increase trade size by appealing to an array of trading participants, including both passive block traders and those using algorithmic trading strategies.

Moreover, the BLX model also includes several built-in anti-gaming features, such as volume triggers and a mid-point pricing window so that the system cannot be ‘pinged’ by information-seeking traders.

Instinet has further added that BlockCross, an independent ATS owned by Pulse Trading, has been added as an access provider to BLX, offering BlockCross clients opt-in access to the platform. Institutional clients can also access BLX through Instinet’s Newport 3 and Instinet Trading Portal EMS platforms, the Instinet Execution Experts algorithms or other third-party brokers that have connected.

Jonathan Kellner, president, Americas, Instinet, said: “Given today’s environment, in which the average trade size has fallen below 400 shares, we believe there is a tremendous opportunity for BLX to help clean up the tape by aggregating orders from multiple parties and then initiating a point-in-time block cross. In addition, we see BLX as a compelling complement to our existing dark liquidity offerings, which include multiple daily crossing matches and the CBX continuous dark pool.”

Instinet is an electronic trading and agency-only brokerage services firm.