Liquidnet teams up with TP ICAP Midcap on block trading

Recently, the technology-driven agency execution specialist has partnered with TP ICAP Midcap to increase block liquidity opportunities in European Small and Mid-Caps (SMEs). The collaboration aims to address issues related to liquidity and execution for Liquidnet’s members. It also expands upon its acquisition by TP ICAP, highlighting the synergies between the two entities and the advantages they can offer to their clients.

Dealers will be able to access digital tools for debt capital markets, including the new issues, through TP ICAP’s electronic portal Fusion – which also enables users access the group’s aggregated liquidity and post-trade services. The strategic integration also leverages the existing geographic infrastructure and expertise within the TP ICAP Group.

Chris Jackson, Global Head of Equity Strategy and Head of EMEA Equities at Liquidnet said: “Finding block liquidity in small and mid-cap names remains a challenge for most asset managers. It’s a challenge that often goes beyond simply matching sedol codes in a venue. Our unique global liquidity network combined with our suite of innovative liquidity discovery offerings position us well to help our Members address this. I look forward to combining these capabilities with TP ICAP Midcap’s specialist knowledge and liquidity to further reduce the cost of trading for our Members.”

Charles-Henri Berbain, Managing Director at TP ICAP Midcap commented: “The lack of research limits investment in SMEs but for many asset managers it is first of all the lack of secondary market liquidity that is the real problem. There is a need to improve secondary market liquidity as a means of boosting investment in SMEs. We have been specializing in Small and Mid-Caps for nearly a decade and I’m truly excited to collaborate with the Liquidnet team to address this challenge.”

Block trading is a practice in financial markets where large trades are executed outside of the public market on a bilateral basis between two parties. This type of trading is particularly important for institutional investors who need to execute large trades without causing significant market disruption or price movements.

In Europe and the UK post-Brexit, there has been ongoing regulatory debate around block trading, particularly with regards to the use of systematic internalizers (SIs). SIs are firms that execute client orders on their own account and are subject to less stringent regulatory requirements than public exchanges.

Under MiFID II regulations, SIs are allowed to execute large block trades without pre-trade transparency requirements. However, there has been concern that this could lead to a lack of transparency and potential abuse of the system.