Forefront Communications

Fund Fire: BlackRock, Fidelity-Backed Dark Pool Lures More Managers

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Mark Dowd

Mark Dowd

A trading venue kick-started by a group of the world’s largest asset managers – including BlackRock and Fidelity – has expanded its reach by adding more asset managers to its platform.

Luminex Trading & Analytics, which launched in late-2015, has added 40 new asset managers to its platform in the last year to boost its membership ranks to 175, according to Jon Clark, the firm’s CEO.

More asset managers trading on the platform means more liquidity and better prices for participating institutional managers that rely upon such anonymous trading venues to exchange large blocks of stocks without alerting the market – which can cause unfavorable price moves.

“We’re hoping to be near 200 subscribers by year’s end but it’s all part of our daily processes – signing up accounts and expanding engagement on a daily basis,” says Clark. “As you approach 200 to 250 accounts, you really establish some nice critical mass,” he says. New additions include long-only traditional asset managers and hedge funds, he says.

The consortium of asset managers that formed the platform also includes J.P. Morgan Asset Management, Capital Group, BNY Mellon and State Street Global Advisors. The platform traded on average 9.9 million shares across 262 transactions daily for the week of July 17, according to the most recent publicly available data from Financial Industry Regulatory Authority (FINRA), and had a record trading day last Thursday, according to Clark. The overall shares traded figure is low compared to other trading venues, but the fact that these are concentrated in few transactions indicates large buy-side firms use the platform to exchange big blocks of stock – an increasingly important function for managers shifting institutional-sized orders.

The trading function has in recent years catapulted onto the radars of institutional investors and their consultants, who want to make sure their asset managers are engaging with the best trading platforms. Clark has not been approached directly by investment consultants, but says that asset manager clients of the trading venue say Luminex is popping up on investor questionnaires.

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