Trading platform Lava FX has added to its roster as it moves towards the launch of its interbank trading platform which will incorporate the FX market’s first “Dark Pool” liquidity mechanism.
Marjorie Brown has joined the firm after nine years with EBS in
Brown’s hire comes as Lava prepares to launch its interbank-only trading platform (see Profit & Loss, June 2006) which will feature the FX industry’s first “Dark Pool” liquidity mechanism. Dark Pools have become increasingly popular in the equity markets as they allow large trading firms to execute big tickets away from the glare of the wider market community.
Sources close to Lava tell Squawkbox that “just about every major bank is signed up to the interbank platform” and interest in the Dark Pool aspect is growing among the banking community. “If this allows us to clear large amounts in a single ticket it will be a major efficiency gain,” says the head of trading at a top ten bank. “We still find it frustrating that executing a large amount on the existing platforms normally involves an equally large number of tickets – there is still a cost-per-ticket issue in a fully automated environment.”
The Dark Pool feature has been created to bring off market execution seen in the equities space to FX, and allows banks to put up their interest of buying or selling without either side knowing who the counterparty is until the deal is complete. It will be available to users through an API and only open to those major banks that have credit facilities for each other as well as large enough risk exposures. Smaller banks that typically access the market via a prime broker will not have access to the Dark Pool and will be restricted to the interbank platform, which will stand alone from Lava’s core B2C and C2C platform.
Ahead of the launch of interbank platform, Lava is also releasing new order functionality for its main platform at this week’s ACI Congress in
By using this feature, he explains that users are able to set take profit orders and benefit from an extension of the market move – a pure instance of running a profit. If, for example, a user has a take profit bid at 50, the order can be executed at 50, however the user also has the option of establishing what is effectively a stop loss on the order at 50 bid. That way, Ogg explains, if the market goes under 50, it is only when it goes back to 50 bid that the order is executed. If it continues to move lower the user is extending the life and profitability of the position.