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April 15, 2009

Penson Leaps Into the Dark

By James Ramage

Any day now, Penson Execution Services will deepen the already vast dark pool space with the debut of its ATS.

A New York-based broker-dealer part of Penson Worldwide will launch its dark pool, Dublin ATS, to take advantage of what it sees as a lack of quality independent, neutral destinations, said Dan Weingarten, co-director of global sales and marketing at Penson Financial Services and president of Penson Execution Services. The pool will unite the sellside liquidity from Penson's broker-dealer execution-only customers and its almost 300 clearing correspondents, including high-frequency, algorithmic and retail flow.

"Our correspondent base tends to be very active in the marketplace," he said. "It tends to be very large takers of liquidity."

Dublin-Gaelic for "black pool"-will be a continuous-match, non-displayed pool of liquidity. It won't send out indications of interest or information about the orders on its book, Weingarten said.

"We're focused on the sellside," said Sean Malloy, co-director of global sales and marketing at Penson Financial Services, and executive vice president of Penson Execution Services. "We're committed to supporting their business and have no interest in going after their buyside customers' business directly."

Orders Dublin will accept include immediate-or-cancel, those that ping the book and those seeking an execution before routing through Penson's network to various exchanges and ATSs, he added. Dublin also accepts standard dark orders: those that are just sent to its book and sit within the NBBO looking for executions.

"We think there's an opportunity," Weingarten said, "that coming in as an independent, non-conflicted execution ATS has a lot of legs to it."

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