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August 6, 2009

SunGard Reaches into the Dark

By James Ramage

SunGard has decided to throw its hat into the crowded dark pool ring. The vendor in June launched Assent ATS through its Assent broker-dealer division.

To establish a beachhead in a space with upward of 40 competitors, the dark pool will combine retail, institutional and high-frequency order flow from its Brass order management system users, as well as its Assent and GL Trade brokerage customers, said Chris Lees, vice president of SunGard's Assent Liquidity Services.

"We believe that the Assent ATS will be an attractive proposition and venue for our clients, and we hope to win their business on the basis of liquidity, ease of access and overall cost," Lees said.

The dark pool becomes part of the electronic broker Assent's overall offering, including its smart order router, algorithms, direct market access and its dark pool aggregator. More importantly, it integrates into the Brass OMS. And in doing so, according to the firm, it should ease access for the OMS users to the ATS and ultimately help them reduce transaction costs.

This is important, because SunGard is counting on its Brass users to light up its ATS to get it off the ground and to attract new users.

But will Brass users participate? One of them, Stephens Inc., in Little Rock, Ark., is giving it a shot. The brokerage met with SunGard reps to get the formal introduction to the dark pool and is currently road-testing it, said Leon Lants, senior vice president, managing director and head of Stephens' equity trading.

Chris Lees, SunGard

The brokerage uses Assent for some sponsored access, dark aggregating and smart routing, Lants said. It doesn't yet use Assent for its algorithms.

Stephens' plan is to try the ATS out gradually and weigh the results. Ultimately, Lants is wary about relying completely on just one firm for its connectivity, compliance, order routing, sponsored access and smart routing.

"I understand the advantages and potential synergies that are created," he said. "I also need to make sure I'm responsible to our obligations ... that this is advantageous to our customers, and not just me, in the process. Certainly, it's easier to just use this one system to touch everything. But I'm trying to at least think through the potential ramifications of all of it."

Pricing is another crucial factor for success in the dark pool space, according to Joe Gawronski, president and chief operating officer at Rosenblatt Securities. Rosenblatt follows dark pool trends and volume in a monthly newsletter.

Pricing Assent ATS well will give SunGard its best chance at success in the early going, he said. "What is SunGard going to charge for this? That's a big question," Gawronski said. "If it's very cheap pricing, that's going to be much more appealing to a sellside audience that's very margin-conscious in this environment than if they're going to try to price it higher."

SunGard wouldn't disclose its pricing, beyond saying it would be "competitive." Nor would it disclose how much volume it will pump through its ATS from its business lines. SunGard also wouldn't give projections for Assent ATS's growth.

 

 

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