Liquidnet reports that XTX and ELPs have departed from their network restrictions, implementing a novel bi-lateral workflow arrangement.
In a significant move, financial trading network Liquidnet has introduced a new workflow designed to offer buy-side firms access to bilateral liquidity from market makers across Europe. This initiative aims to provide Liquidnet's members with the tools to access meaningful liquidity with confidence and control.
The workflows offer mid-price and touch executions, with configurable, anonymous interaction and monitoring of fill rates and information leakage. Liquidnet's bilateral channel will launch anonymously and remain segregated from its block pool.
XTX Markets is one of the four electronic liquidity providers participating in this workflow, with three additional market makers also involved, although their names remain undisclosed. The identities of these market makers are currently not publicly available. Liquidnet 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. It's worth noting that Liquidnet's report suggests that the figure of bilateral activity representing close to 50% of European equity volumes may be exaggerated due to the lack of clear post-trading reporting and flagging in Europe.
Trades in this stream are meant to address concerns about leaked trading axes of large natural flows from institutions. The service also aims to give the market-making community an opportunity to extend their reach and better control their risk.
The new channels are outside Liquidnet's multilateral trading facility (MTF), and the stream of bilateral liquidity will sit outside the blocking network. The service will integrate with Liquidnet's front-end application and liquidity-seeking algorithms, ensuring a seamless user experience.
However, it's important to note that the workflows will not directly interact with liquidity resting in the Liquidnet pool. This initiative consolidates access to market-maker streams via Liquidnet's front-end application and liquidity-seeking algorithms, offering a unique and valuable service to its members.
As Liquidnet continues to innovate and expand its offerings, this new buy-side workflow for accessing bilateral liquidity in Europe marks an exciting development in the world of financial trading.
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