Dark pool platform MatchNow completes migration onto Cboe infrastructure

abdelaziz Fathi

Cboe Global Markets said today it has completed the technology migration of Canada’s largest dark pool stock trading platform, MatchNow, which was acquired in 2020 from Virtu Financial for an undisclosed price.

Cboe

Along with this milestone, the exchange operator has rolled out Cboe BIDS Canada, bringing a new block-trading offering to the Canadian equities market. The new offering leverages BIDS Trading’s proprietary technology to facilitate block trading on MATCHNow’s Conditionals platform.

“We are pleased to build on MATCHNow’s success with the launch of Cboe BIDS Canada, the next evolution of our Conditionals offering. By extending MATCHNow’s Conditionals book through the BIDS’ platform and extensive global buy-side distribution network, Cboe BIDS Canada will bring greater block-sized liquidity to benefit the Canadian block-trading market,” said Bryan Blake, Cboe’s head of Canadian equities.

The MatchNow’s takeover deal was initially signed back in May 2020, nearly 14 months after New York-based Virtu Financial Inc. acquired MatchNow. This was part of its $1-billion buyout of electronic brokerage Investment Technology Group in March 2019.

MatchNow, officially known as TriAct Canada Marketplace LP, has attracted interest from Canadian bourse TMX Group and rival exchange Aequitas Innovations Inc., which owns Neo Exchange. Other foreign stock exchanges and private equity funds were also interested, as many of them wanted to increase their stake in the rapidly growing world of so-called dark pools.

Increasing scrutiny on dark pools

The private trading platforms, typically geared toward big investors, have enjoyed a growing market share. MatchNow commanded more than 5 percent of total stock trading and 65 percent of anonymous trades in Canada, where over $5 billion worth of equities exchange hands each day. According to recent statistics, the Toronto-based platform facilitated buying and selling of about 1.2 billion shares a month, carrying out more than 2 million trades.

From a strategic point of view, Cboe indicated that the acquisition of MatchNow aligns with its overall growth strategy and gives it a foothold in the Canadian equity trading business, which it plans to grow.

“Since Cboe acquired MATCHNow, we have been laser focused on the full integration of our companies and defining how we can further serve the Canadian market as one team. Significantly, this included migrating MATCHNow’s platform to Cboe so that Canadian customers can benefit from our world-class technology and access Cboe’s diverse markets, asset classes, data and product suite with greater ease and efficiency,” said Chris Isaacson, chief operating officer of Cboe Global Markets.

Dark pools are private electronic trading sites that allow institutional investors to anonymously trade large blocks of shares without being visible to other traders until they are executed. The anonymity of price tags is designed to help investors trade large blocks of shares without the market moving against them.

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