Major Investment Banks To Create Block Trading System

Six investment banks have agreed to form Block Interest Discovery Service (BIDS), an alternative trading system (ATS) designed to increase competition and provide clients with an alternative liquidity source in the block trading market. The banks involved in the consortium

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Six investment banks have agreed to form Block Interest Discovery Service (BIDS), an alternative trading system (ATS) designed to increase competition and provide clients with an alternative liquidity source in the block trading market.

The banks involved in the consortium are Citigroup, Goldman Sachs, Lehman Brothers, Merrill Lynch and UBS. Morgan Lewis & Bockius LLP acted as counsel to the consortium.

BIDS aims to allow qualified market participants to complete sizable block trades through continuous order matching as well as trade negotiation. BIDS resolves the need to find legitimate trading counterparties without prematurely revealing trading intentions. Information about trading intentions is only revealed when both parties present a legitimate opportunity to trade with each other. Furthermore, orders and executions remain anonymous; the identity of one counter party is never revealed to the other counter party.

The concept and technology for BIDS was developed by Alberta MarketSolutions, Ltd, they will provide ongoing support to BIDS.

“Our discussions with senior traders at different buy-side firms have been consistent – they look forward to the sell-side taking the lead to create a new low-cost industry utility that integrates disparate liquidity,” says Paul Hanson, a Director at Alberta Market Solutions. “They believe this platform will provide a level playing field for market participants.”

BIDS is accessible to all qualifying broker-dealers and their institutional clients, subject to basic credit and regulatory considerations.

They expect to announce a CEO appointment in the next few weeks and, subject to regulatory approval, expect to commence trading in early 2007.

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