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BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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April 15, 2009

Pipeline Borrows from Liquidnet

By Peter Chapman

"We continue to safeguard our pool better than anybody," said Alfred Eskandar, Liquidnet's global head of corporate strategy. "We have strict membership requirements."

Eskandar also pointed out that Pipeline's new service does not eliminate information leakage. A message sent to a trader who has traded the security but does not have a contra-sided order on his blotter amounts to sharing information with someone who may not be interested in trading again.

"That is not accurate enough," Eskandar said. "That's past tense. The train has already left the station."

Liquidnet is nearly three times the size of Pipeline. In 2008, it traded 38.6 million shares per day on average, single-counted, according to research done by Rosenblatt Securities Inc. Pipeline processed 13.9 million.

Pipeline is not the first broker to incorporate blotter-scraping technology into its dark pool offering. Investment Technology Group, Pulse Trading and Aqua Equities are also using the technique. Liquidnet, which holds a patent on the technology, is suing ITG and Pulse for patent infringement.

Pipeline spent two years developing its new service, mainly to get the encryption right. It has received support from some very large institutions who do not use Liquidnet, Federspiel said. "This will get used heavily," he said.

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