Superannuation funds and fund management companies that own significant stakes in companies have outgrown stock markets, says Sam Macqueen, the head of Liquidnet in Australia.
“Superannuation funds and institutions have outgrown the ability of the market to achieve the execution outcomes they want,” he says. “The wild swings, the big turnover we have recently seen in markets have highlighted how inefficient traditional exchanges and trading strategies are as people have realised there is a lot of information leakage in traditional trading methods that can impact people’s performance and their ability to take advantage of opportunities in the market.”
Liquidnet matches buyers wanting to buy large blocks of stock with sellers who wish to sell large blocks anonymously through its own so-called dark pool. The company charges an execution fee, about half the full service rate that is about 20 basis points.
“There will always be the need for a central exchange for listing as well as lit trading,” says Macqueen. “The smart exchanges have different products rather than trying to fight with other exchange venues.”