The first alternative trading system for equity options is due to launch in the US at the end of this month after the completion of fundraising from a group of financial institutions, Financial News reports.
The Archangel platform is being developed by 3D Markets, a US company launched in June by chairman David Mortimer, former head of the algorithmic and portfolio trading group at boutique investment bank Piper Jaffray.
The new platform is a dark pool an electronic trading venue that does not quote prices. It matches buyers and sellers anonymously, minimising data leakage and market impact, often with lower direct trading costs. Their popularity is rising in the US equity market, where their number has doubled to more than 40 since the start of last year.
“There is increasing use of equity options by fund managers,” says Jeromee Johnson, president of 3D Markets. “They face the same challenges in the equity markets when they want to execute large trades anonymously but the average trade size has decreased.”