ITG launches POSIT Marketplace in Australia to help manage trading costs in an increasingly complex market

  • New ITG liquidity aggregator aims to reduce Australian trading costs
  • Changing trading landscape means fund managers need tools to keep pace with best execution

Investment Technology Group (ITG), a leading agency broker and financial technology firm, today launched POSIT Marketplace for Australian equity trading. The first of its kind in Australia, POSIT Marketplace links institutional liquidity from POSIT, ITG’s world-leading crossing network, with liquidity from some of the largest broker pools and alternative trading venues in the market. It provides a way for institutional traders to trade more efficiently, cheaply and simply, and is particularly useful as the Australian trading landscape becomes more fragmented.

By uniting liquidity from multiple sources, POSIT Marketplace is designed to reduce the costs of trading and improve efficiency for fund managers and institutional firms. It does so by addressing the three largest cost factors: spreads, market impact and delay costs.

Commenting on the launch, Michael Corcoran, ITG’s Head of Sales and Trading, Asia Pacific said: “Fund managers should be aware that trading costs can make millions of dollars of difference to fund performance and that new tools are available to help manage these costs. As best execution – trading as efficiently as possible – becomes a focus for Australian regulators, fund managers and investors, tools such as POSIT Marketplace will be a vital component of Australian market evolution.”

POSIT Marketplace is already available in global markets across the Americas, Europe and Asia. Since its launch in Hong Kong in March this year, the aggregator has delivered an average of 10 basis points saving on each trade crossed.

Corcoran adds: “The Australian trading landscape is undergoing a period of significant change. As new trading venues are introduced, a way to reach them all simply and efficiently needs to develop in parallel. POSIT Marketplace has built a strong global track record of reducing costs and helping institutional traders unite liquidity as markets become more complex. This is important as the Australian market changes, and should ultimately bring benefits to Australian fund managers and the investors whose money they’re managing.”

Trading cost FAQ

How does aggregating liquidity help institutions reduce trading costs?

Crossing networks such as ITG’s POSIT are designed to provide a secure, anonymous venue for institutions to trade without leaking information to the market before trading and, in doing so, push the market price. POSIT Marketplace links a number of off-exchange or alternative trading venues together.

How does POSIT Marketplace work to reduce the costs of trading for the buyside?

Trading costs are primarily affected by three factors. POSIT Marketplace helps to address them all:

  1. Spreads – POSIT Marketplace aims to cross orders at the mid-point or better, saving half the bid/offer spread on each trade.
  2. Market impact costs – by only executing in liquidity pools that maintain pre-trade anonymity, POSIT Marketplace reduces information leakage to the market, a significant factor in managing trading costs.
  3. Delay costs – trade cost analysis shows that the largest factor in trading costs is delay, ie the amount of time taken to get the order done. By aggregating liquidity across a range of alternative liquidity venues, POSIT Marketplace increases the likelihood and frequency of orders being filled, minimising delay.

Why does POSIT Marketplace improve fill rates for Australian traders?

An established independent agency broker in Australia for over thirteen years, ITG has a large local and international client base trading Australian equities. POSIT Marketplace aggregates into one place all of this liquidity and offers additional access to external Australian dark pools with their range of buyside, sellside and proprietary flow. Advanced technology with high-speed crossing maximises the chances of getting fills and brings liquidity together through a single access point.

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