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NYSE Euronext To Offer Transparency For Alternative Trading Systems

Barclays Capital, GETCO, Goldman Sachs, Knight and UBS are expected to participate in it

NYSE Euronext is planning to provide a means for participating broker-dealers’ alternative trading systems (ATSs) and off-exchange market centers, beginning next month. It aims to create transparency regarding volume and individual ‘dark pool’ activity by allowing the firms to ‘print’ trades on the FINRA/NYSE Trade Reporting Facility (TRF) and display the daily activity of each trading venue on its portal.

Reportedly, some firms have indicated an interest in its transparency initiative and are establishing the necessary technology to begin participating in the program in the coming weeks. NYSE Euronext has said that the daily trading activity volume published by the FINRA/NYSE TRF will be based on trades reported to the FINRA/NYSE TRF, which follow FINRA’s trade-reporting rules.

Joseph Mecane, executive vice president and chief administrative officer for US Markets at NYSE Euronext, said: “This is an example of NYSE Euronext and the industry working together to develop a positive solution to address the lack of understanding regarding the extent and nature of ‘dark pool’ trading, which has been a concern for regulators and legislators. We believe this will bring requisite and appropriate sunlight to alternative trading systems and other sources of off-exchange liquidity, and also help standardize the way their trading volumes are reported.”

Frank Troise, head of equities electronic product at Barclays Capital, said: “This initiative is an important step toward the standardization of trade volume reporting across ATS venues. Industry participants will be able to make more informed order placement decisions and thereby improve their execution quality.”

Jon Ross, head of GETCO Execution Services, said: “We need to maintain the right balance between vibrant public price discovery and individual execution preference. This initiative is an important first step in collecting the data critical to analyzing and preserving that balance.”

Jamil Nazarali, managing director of Knight Equity Markets, said: “Knight is pleased to work with NYSE Euronext to increase transparency among off exchange liquidity providers through their FINRA/NYSE Trade Reporting Facility. This new facility will enable market participants to better evaluate and compare competing pools of liquidity to make more informed routing decisions.”

Charlie Susi, head of direct execution for the Americas at UBS Investment Bank, said: “The way the industry has advertised non-displayed volumes and crossing rates has been highly inconsistent – which makes it very difficult for clients to get a clear picture of liquidity. This initiative is something we’re pleased to see, because it will establish better objectivity and clarity. We encourage all of our peers to join us in participating.”