However, it says shows off-order retail trades in the US do not receive “meaningful price improvement” as these transactions save an average of only to 0.0001 to 0.001 cents per share. “This equates to around $0.3 – $3 on an average CLOB trade in Telstra,” ASIC notes.  Liquidnet, one of the first dark pools operators in the US, has nudged at the broker-dominated Australian crossing market since setting up shop in early 2008. Stephen Zilioli, co-head of the domestic business, says a $20,000 threshold would not affect its business, whose average block size is $5 million, of which a “freakishly consistent” average of $1.3 million gets filled. To date, it has not traded less than $1 million and the venue’s largest transaction is $24 million.

The ASX currently defines block trades as being $1 million or more in volume. To better reflect the demand for particular stocks, defined in terms of average daily traded volume (ADV), ASIC has proposed a tiered system. Block trades in the top 12 stocks by ADV must be a minimum of $2.5 million; the next 13 must be at least $1 million; the next 23 at $500,000. However block trades come to be defined by the regulator, Zilioli says dark pools will proliferate in Australia. Since its arrival, Liquidnet has signed 53 domestic clients and its positioning against the ASX has changed from an “enemy” to “part of the furniture,” he says. Australia was the 27th market it expanded into, and Israel recently became the 38th. With the signing of two New Zealand clients last November, it now has 670 “members” in its network. Brokers, being sell-side competitors, are excluded from the network.

“The liquidity is on the buy-side. Brokers will get big orders, but the lion’s share of block liquidity is on the buy-side.” The latest dark pool entrant into Australia, POSIT Marketplace, launched by Investment Technology Group (ITG), has no such preference. On its first day of operation, October 27, it was available to a client set exceeding 100 clients that was a mixture of brokers and investors.  It serves as a gateway to a series of underlying dark pools. It aims to make liquidity searches easier for investors by eliminating the need to put orders in at various dark liquidity venues. The dark pool-of-pools has been running in Hong Kong since March. So far, an average of 10 per cent of orders have been filled in that market, resulting in an average 10 basis points reduction in trading costs, says Michael Corcoran, ITG’s head of sales and trading in the Asia-Pacific region.