Let sales traders be sales traders. That’s the current mantra at agency brokerage BNY ConvergEx, which has created a new three-person trading desk to address the proliferation of dark pools.
The firm this week introduced what it calls its “Dark Desk,” which works in conjunction with its sales traders in the liquidity-seeking process. The new desk’s only charge is to find liquidity in non-displayed venues for buyside clients. Sales traders at the firm work their own orders in the marketplace.
The Dark Desk was created to lessen the load on sales traders, says Carey Pack, chief executive of BNY ConvergEx Execution Solutions. The traders’ role on the new desk is to find, manage and access dark liquidity, Pack says. The desk also acts as a single access point to 20 dark venues, he notes. There are plans to add up to eight more. Pack declined to list any of them, however.
“Our sales traders get the benefit of a dedicated team that is watching all of the dark markets to see where liquidity may be, as orders are entered and managed,” Pack says.
How it works:
A client gives a sales trader an order. The sales trader may take part of that order and hand it to the Dark Desk to search various hidden pools for liquidity in that stock.
“If it gets hits, we may shift more volume to the Dark Desk,” Pack says. “If we’re not getting hits, we may shift more volume to the light markets. It’s all a matter of managing liquidity in the broadest and most efficient way.”
All of BNY ConvergEx’s traders, including those on the Dark Desk, interact off of one order management system, Pack says. The brokerage formed the Dark Desk as a result of two trends it noticed.
For one, many of its clients had been growing frustrated with fragmentation in the marketplace, Pack says. BNY ConvergEx also noticed how business began to shift away from its electronic platforms over the last six months and back to its sales traders.
With the increased volume sales traders are seeing, the Dark Desk provides them with another pair of eyes to find liquidity in the dark venues, Pack says. It frees them up to concentrate on sales and working orders.
