ITG Rolls Out Netting Service

Launched earlier this year, the service aims to reduce the number of trading tickets associated with institutional block trades, says Stephen Alepa, a managing director with ITG. Liquidity fragmentation has lead to an explosion in trading tickets, which in turn has raised the price of settling a trade with custodians, he adds.

For an example a 250,000-share order that would be spread across eight portfolios sent to five trading algorithm providers could generate approximate 40 trading tickets, he explains. "With analyst firms such as Tabb Group estimating each trading ticket costing between $8 and $20 to settle and firms having 40,000 allocations per day-that could run into more than $500,000 in costs for a firm," he adds.

With the new ITG offering, the brokerage would act as a central clearing broker, which would reduce the number of hypothetical trading tickets from 40 to approximately eight.

"Other firms tried this in the past and failed because they tried to disintermediate the brokers from the buy-side clients," says Alepa. "We're not doing that," he adds.

Currently one buy-side client is live on the service with a few other brokers. "We start with the algo providers that are pushing the fragmentation," says Alepa. "I can count them on one hand now, but later there will be more of them," he adds.

ITG also recently signed two new clients in Mumbai of ITG Net, but Alepa declines to name the firms.

Within the past month, ITG has inked a deal with foreign exchange (FX) trading venue FXall to provide fully integrated FX services with ITG's trading technology, say officials (DWT, Feb. 18). Initially, ITG will connect FXall's relationship-trading platform into its buy-side order management system (OMS) Macgregor XIP and execution management system (EMS) Triton. ITG also introduced its Posit Alert suite of crossing products to the European market (DWT, Feb. 25).