Liquidnet has long been known as a platform on which to trade large equity blocks. The 14-year-old company is raising its own bar in terms of operations and it’s also branching out beyond the stock market.
But amid the improvements and the perpetual evolution of market structure, Liquidnet stays true to its raison d’être.
“Our mission is to make markets more efficient,” said Seth Merrin, Liquidnet’s founder and chief executive officer. “We’re only going to get into a business if we figure out how using technology can make it more efficient, which would give us an edge and provide an advantage for our clients. That’s our business model.”
In March 2014 Liquidnet acquired bond-trading platform Vega-Chi. It’s the company’s first foray into fixed-income markets, which have seen a slew of electronic venues emerge in the past couple years amid a dearth of traditional Wall Street dealer liquidity.
“The banks that historically have facilitated bond trading have maybe 20% of the capital they used to, which is a problem,” Merrin told Markets Media. “Unfortunately price dislocations are exacerbated when there’s not enough capital to facilitate it, so getting into the fixed-income market is big for us, for our customers, and for their customers.
Seth Merrin, Liquidnet
Liquidnet made several key hires last year, including Adam Sussman as head of market structure and liquidity partnerships, Bob Garrett as head of technology, and Rob Laible as head of the global performance team. The firm continued its global expansion, entering India as its 43rd market on the equity side.
Dark pools have come under fire for perceived transparency shortfalls, and Liquidnet has responded. Last year, the company onboarded customers to a new system of transparency control settings, which provides access to a web-based portal where traders can monitor and manage the liquidity sources they interact with, as well as the Liquidnet products and services in which their data is included.
“We went out to each one of our members around the world, with a dashboard that basically allows them to see everything that’s going on in the dark pool,” Merrin explained. “It’s a software, a technology, that harnesses all of our data.”
Liquidnet kicked off 2015 by launching Liquidnet 5, which the company says is the first platform to deliver to the buy side one of the most diverse sources of safe and actionable liquidity alongside optimized analytics and advanced execution tools through one customizable interface. The commission management and payment functions are integrated as well.
“We have so much data, information and analytics here, and hundreds of millions of dollars’ worth of technology. We’re now putting that on the front end to help our clients at the point at the point of trade,” Merrin said. “Every basis point matters these days.”
“This platform allows us to be very agile, and update and upgrade very quickly,” Merrin continued. “Once we upgrade our client base, we’re going to give them additional functionality every month. I don’t want to feed them with a fire hose. I want to do it incrementally.”