Harborside+, the institutional order matching platform, says daily average liquidity in its large block trading facility has increased from $1 billion to $3 billion over the last year. The company also disclosed that its revenues grew 315% in 2003.
“These are superior results that underscore the value we set out to deliver to large block traders,” says Harborside+ President and CEO, Robert C. Hall. “Our business model for trading large blocks continues to receive validation, as more traders realize the singularity and depth of liquidity we have to offer.”
Harborside+ manages confidential indications of interest (IOIs) submitted by institutional traders on the buy-and sell-sides. The company is at pains to emphasise that it is not an electronic communications network (ECN) or alternative trading system (ATS).
The Harborside+ platform combines technology and human intervention, with the aim of enabling buyers and sellers to find each other and complete transactions without market impact. The company says successful large block trading depends upon uncompromised confidentiality, which is why it does not reveal customers, trades or volumes.
Harborside+ pre-qualifies buyers and sellers of size to minimize market impact and maximize trade size. Traders submitting IOIs to Harborside+ indicate only side (buy or sell) and symbol. IOIs are accumulated into a secure server, and remain encrypted until matched with a natural contra party. IOIs can be accepted by Harborside+ through a variety of channels such as integration with a firm’s order management system or via a FIX connection.
When the system locates a potential match, the Harborside+ member database contributes unique customer provided information that increases the fluidity of the negotiation process. Harborside+’s trading desk then assists counterparties in finalizing the transaction through private, phone-based communication that keeps identities confidential. Trades are executed by Harborside Securities, a totally independent registered broker-dealer.
“There are several reasons our approach is working so well,” says Harborside+ Chief Operating Officer, Michael Cashel. “We open our service to both the buy- and sell-side of the Street. Second, we can link with any firm on the buy-side, whether or not they have an order management system. Third, our trading desk facilitates a more productive discussion between both sides of a trade. All these factors, each unique to our service, have helped to drive our average print size to 72,000 shares, and attract more participants and IOIs to Harborside+ which translates into a liquidity pool traders have come to recognize and appreciate. The scope and depth of our liquidity pool simply cannot be found anywhere else, and our member firms know this.”
Harborside+ currently has 230 member firms: 140 are from the buy-side with 90 broker-dealers comprising the rest. Most of these firms have multiple traders submitting IOIs to Harborside+. The company plans to add approximately 61 new firms over the next several months.
Harborside+ also reported that 76% of its transactions in 2003 were in small- to mid-cap stocks, and that the median trade size was 72,000 shares, well above industry averages which the company attributes to its model of combining the best of technology with human interaction. Fifty-five percent of Harborside+ trades are from listed shares, and 45% are OTC shares.