ConvergEx Group, a global brokerage company based in New York, is rolling out a new ETF trading platform that will allow investors on the buy-side of a trade to get multiple quotes simultaneously. Today, when someone wants to buy an ETF, they have to seek out quotes from individual liquidity providers one at a time. In ETFs, it’s the authorized participant’s job—who may be a market maker, a specialist or any other large financial institution—to buy the securities that the ETF should hold in order to create the so-called creation unit. This process is important because it’s what keeps ETF share prices trading in line with the fund’s underlying net asset value. Wide spreads result in poor execution that ultimately cost investors money. Liquidity Aggregator ETF Direct, as this agency-only ETF trading platform is called, is essentially a “liquidity aggregator,” whose purpose is to broaden ETF market access by making the process of quote sourcing simpler both in broad markets as well as in niche sectors, and by achieving better execution through narrower spreads. Other features of this platform include complete anonymity for clients and market makers, the company said. You can also easily keep track of your trades with a “comprehensive audit trail,” a feature that’s designed to increase transparency in quote sourcing. ETF Direct is part of Convergex’s efforts to ramp up its presence in the ETF market and offer tools for better trading execution. The current iteration of the platform is just its first. Other versions with different features should begin being rolled out sometime next year. “We are very excited about this innovative new platform,” said Troy Draizen, Convergex’s global head of electronic and program trading. “We believe it will continue to enhance price discovery when trading block-size ETFs where liquidity is a concern.” The platform is expected to go live in August.
ETF Direct, a new trading platform and liquidity aggregator that will allow buyers of ETF"s to get multiple quotes simultaneously, and provide both clients and market makers with anonymity. ConvergEx is planning to launch ETF Direct in August as part of its plan to raise its presence in the ETF market, other versions with additional features will be added next year.