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Chaperoning Liquidity Seekers

Electronic trading pros latest gambit

Traders Magazine, May 2008

Nina Mehta

The problem: a shortage of displayed or available liquidity for institutional traders. The solution? Encourage wary liquidity providers to post large markets by making executions as likely as possible. PDQ Enterprises, a five-year-old technology company founded by a former chief technology officer of the New York Stock Exchange, is setting itself up as a kind of dating service for liquidity providers and takers. The idea is that the shy party-the liquidity provider-can be encouraged to respond to the party seeking liquidity if there's proper chaperoning and sensitive information on both sides is safeguarded. If interest transpires, PDQ, which stands for Procedure Derived Quotes, ships the orders, independently but in tandem, to the desired exchange or ECN for a potential consummation of the trade.

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