AX Trading has launched the AX Trading Network, a new electronic trading network (ETN) that allows institutional traders to target and trade with selected counterparties in a secure environment.
"We live in a networked world," says AX CEO George O'Krepkie. "We can connect with people around the world. We can share memories, photos and music. But we don't really have a true 'network' to trade securities…until now. We are changing the way traders connect."
As an ETN, AX is all about buyside trader access to liquidity, price discovery and control of order information. AX aims to address many current difficulties associated with exchanges and dark pools.
"AX addresses a common problem in trading today," says AX Founder Kevin Callahan. "Many buy side traders are not exposing the balance of their orders to any dark or lit venues, resulting in the fact that natural buyers and sellers cannot easily find each other in the market."
AX allows those traders to designate a time and place to trade a particular security – effectively "calling" those other counterparties to the market. To do this, AX operates on a new trading model – a callable auction. One institutional trader, a liquidity seeker, routes an order to AX. They do this via a sponsored broker of the AX ATS. The order then kicks off a five minute call auction and triggers the distribution of electronic AX alerts to targeted recipients. The initiator of the AX auction has control over both the content and distribution of those alerts.
Responders or "participants" in the AX auction can route orders to AX to participate in the auction. At the end of the auction, the AX system performs a match – not just a midpoint match – but a true auction finding the clearing price (inside or outside the NBBO) that results in the largest trade. Post-auction, orders can remain at AX – either resting in the dark or working in the market – while still available for crossing should responders arrive after the auction ends.
"In the end, AX is all about trader empowerment," says CEO O'Krepkie. "Our slogan is 'Your Trade, Your Call' and it guides everything we do. We believe this trading capability will generate greater liquidity, more opportunities to trade, and directly impact trading costs – and in doing so aid in portfolio performance."
