Barclays LX Gunning for Dark Pool Supremacy
Traders Magazine Online News, February 28, 2013
Look out, Credit Suisse. Barclays is closing in on U.S. dark pool supremacy.
Simply put, LX is now the second largest dark pool in the United States, behind only Credit Suisse's long-time leader, Crossfinder.
Amid a multi-year retooling effort and upgrading of its technologies, Barclays LX dark pool has gained market share that's propelled it to second place among its peers, according to reports from both Tabb Group and Rosenblatt Securities.
In January, 91 million shares, or 10 percent of all volume on dark pools, were traded each day on LX, according to the Tabb Group Liquidity Matrix, a monthly liquidity and pricing report for U.S. equities exchanges, electronic communications networks, dark liquidity pools and crossing networks. This was second only to Credit Suisse's Crossfinder, which traded 121 million shares or 18 percent of dark volume.
Rosenblatt Securities, another tracker of U.S. dark pools, reported in its February analysis that LX grabbed 1.41 percent of total consolidated volume of 6.4 billion shares traded daily on all lit or dark venues. That, too, trailed only Crossfinder, which snared 1.88 percent. After Crossfinder and LX came Goldman Sachs' Sigma X, UBS's ATS and Deutsche Bank's Super X pools.
"We laid out a plan two years ago to overhaul our offering end to end, gain market share and provide clients with the best electronic trading tools in the market," said Bill White, head of equities electronic trading at Barclays. "The number two ranking is a reflection of the success of that plan and the strength of our entire equities franchise."
In 2009, its LX dark pool was languishing in 10th place among its peers. By 2010, it jumped three spots to number 7 and then in 2011, it climbed yet again to fifth place. By January 2012, LX had once again moved upward but now into the top 5 dark pools, joining the ranks of Knight Capital Group's Knight Link and Deutsche Bank's Super X. But the upward trajectory continued throughout the year as LX climbed over Knight and Deutsche Bank by December.
With momentum on its side, LX vaulted over Goldman Sachs Sigma X this year to rest at number two firmly behind Crossfinder. And getting into and unseating Goldman in that uppermost of echelons is something that hasn't been done since 2007, Cheyenne Morgan, analyst at Tabb Group noted. She pointed to the firm's revamping of its electronic products, such as algorithms and smart order router, as well as its active promotion of technology as the keys to success.
"Barclays LX saw a 10 percent increase in volume in January versus December, which is a good way to start the year," Morgan said. "Passing Sigma X is extraordinary," Morgan said. "Barclays took a step back and revamped their products and strategies. They knew they had to hone in on their electronic strengths and get the word out."
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