Instinet, an electronic trading and agency-only brokerage, has added hidden and iceberg order types to CBX Asia in Japan, previously a fully displayed trading venue.
The displayed order types already featured in CBX Asia in Japan will interact with the new dark order types following a strict price-time priority, where lit liquidity is crossed before dark at a given price level in the book.
The new order types are available through direct FIX connectivity, via third party provider and through the firm’s Nighthawk liquidity aggregation algorithm, which allows a single order to access multiple non-displayed trading venues and uses an array of techniques to reduce adverse selection, signaling and potential gaming.
Joel Hurewitz, Instinet’s head of Asia Pacific sales – broker dealer and liquidity, says client demand for a continuous platform that combines lit and dark liquidity prompted the move, with Instinet expecting to see an increase in overall liquidity and average trade size in CBX Asia in the short term.
“Eventually, clients will also have the ability to tag orders or portions of orders that they’d like to expose to buyside-only execution venues via Newport 3’s blotter interaction technology,” he adds.
To effect this change, orders matched in CBX Asia in Japan will now be routed to stock’s primary listing market – either the Tokyo Stock Exchange or Osaka Securities Exchange– for execution. Executed TSE trades will be reported via ToSTNet and OSE trades via J-NET. Matched orders will not be confirmed trades until they are successfully reported, which can take up to two seconds.
“As trades are matched, Instinet can optionally provide messaging back to client’s smart order router or algorithmic trading system indicating that an ‘approved cross’ from ToSTNeT or J-NET is forthcoming, which will allow automated trading systems to more efficiently manage their exposed orders. This effectively solves the multi-second latency issue of reporting off-exchange trades to ToSTNeT or J-NET while providing a high-speed continuous trading environment. From the client’s perspective, trading in CBX Asia in Japan will be no different with the change, save for the new addition of dark liquidity,” says Hurewitz.