The dark pool arena continues to grow, with the latest entrant coming from Susquehanna Investment Group. SIG’s RiverCross ATS launched quietly in mid-May. The dark pool had been in the works for well over a year.
Paul Onderdonk, an executive at RiverCross, said the dark pool is initially targeting sellside firms but plans to add broker-sponsored buyside firms to the system in the coming months. The dark pool is already available as a destination on SunGard’s BRASS order management system. SunGard hosts the RiverCross technology. Brokers can also connect to RiverCross via direct FIX connections.
Susquehanna appears to be counting on its trading reputation as a nimble non-bulge-bracket firm to win agency flow from other brokers. “SIG has a track record of looking at businesses, new or established, and figuring it out from a different point of view,” Onderdonk said.
RiverCross is an agency-only dark pool intended for block and smaller flow, according to Onderdonk. “Our goal, as we develop closer relationships with our customers,” he added, “is to innovate based on their feedback, and produce value-added functionality more quickly [than other dark pool operators].” The dark pool is owned and run by SIG but operates independently through a separate broker-dealer called RiverCross Securities.
Ralston Roberts, senior vice president at BRASS, noted that his firm’s relationship with RiverCross enabled BRASS to provide a new connectivity point to customers as soon as the dark pool went live. “That increases the customer’s ability to achieve lower-cost executions and potentially get price improvement,” he said. BRASS has more than 130 broker-dealer clients.
SIG has kept details about RiverCross under wraps. Larry Tabb, founder and CEO of research firm TABB Group and one of the few analysts familiar with the new dark pool, noted that BRASS connectivity gives RiverCross “access to a very significant pool of liquidity.”
Credit Suisse’s Advanced Execution Services announced in late May that it had added RiverCross as a destination for its algorithms and direct access systems. SIG’s Onderdonk declined to say how many other brokers have established access to RiverCross for their algos and DMA orders. He also declined to disclose how much volume the ATS is executing every day.
The SIG exec noted that the dark pool landscape is growing, but that demand for non-displayed venues continues unabated. “The marketplace is looking at these types of venues for low-impact, low-cost and anonymous execution,” he said.