NYSE Euronext and BIDS Holdings, owner of an alternative trading system, have announced plans to form a 50:50 joint venture designed to improve execution quality and access to liquidity in block trading. The joint venture will be open to all New York Stock Exchange members and accessible through BIDS Trading, which will become an NYSE member.
NYSE Euronext will make an investment in BIDS Holdings, becoming a shareholder alongside Bank of America, Bear Stearns, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Knight Capital Group, Lehman Brothers, Merrill Lynch, Morgan Stanley and UBS.
'The joint venture is a timely response to customer needs and reflects our commitment to diversification and customer choice,' says Duncan Niederauer, president and co-chief operating officer of NYSE Euronext.
'We look forward to working with BIDS Holdings and our key sell-side constituents, which represent half of NYSE-listed volume traded on the exchange, to re-aggregate block liquidity. We believe this co-branded approach with BIDS Holdings will serve our clients and markets well by bringing block-size orders back into contact with active traders, algorithms and retail flow.'
BIDS Trading chief executive Tim Mahoney says: 'We expect that this partnership with NYSE Euronext will address the current inefficiencies in block trading such as market fragmentation. This initiative is an endorsement of our efforts to build the leading block interest discovery and trading system in the US. Volume on BIDS Trading has been growing significantly, reaching more than one billion shares in less than six months of trading.'
Bill Neuberger, chairman of BIDS Holdings and global head of product development for Morgan Stanley Electronic Trading, says: 'The announcement of this joint venture is the product of exceptional levels of co-operation and brainstorming among the broker-dealer community and the NYSE.
'The resulting innovative market structure, in combination with the current value proposition of BIDS Trading, should become very important to our clients in their quest for best execution of block-sized trades.'
BIDS Trading is a registered broker-dealer and operator of the BIDS Alternative Trading System, which was designed to increase competition in the US equity block trading market by bringing counterparties together to trade large blocks of shares.
Developed by a consortium of leading financial services firms, the BIDS ATS aims to resolve the classic dilemma of the block trader, the need to find legitimate trading counterparties without prematurely revealing trading intentions. The system is open to all qualifying broker-dealers and their institutional clients, subject to basic credit and regulatory requirements.