TowerGroup’s initiatives for 2006 included tracking four major block crossing networks, while also anticipating launches for four additional broker offerings. In less than nine months, the number of cross networks it tracks has risen to 40.
Though crossing systems are not new to the industry, the buzz surrounding them has increased due to the series of launches by similar systems that are focused on crossing smaller orders.
“The real story here is the explosion in the number of largely retail crossing networks offered by institutional brokers,” says Rob Hegarty, managing director of TowerGroup’s Securities & Investments group. “This rapid growth in solution offerings is dominated by brokers providing crossing networks designed to internalize retail order flow. Their goal is to reduce expenses, gain access to external crossing flow, and create another compelling product to offer to clients. While the flood of crossing networks coming into the marketplace threatens to fragment the very liquidity they were meant to aggregate, connectivity between these networks serves to re-aggregate liquidity and move more trading volume away from the exchanges.”