Newsletter Equity

NATIXIS TRADEX SOLUTIONS ("NTEX") has long been facing, like all buy-side actors, market fragmentation on equity markets. In other words, it is becoming increasingly complex to source liquidity from a growing number of actors, who are less and less continuously present on the market.

NTEX has established a constantly evolving infrastructure. Indeed, the cash equities trading team relies on an Order Management System (OMS*), itself connected to an Execution Management System (EMS**), both of which undergo regular upgrades. Several market access channels are then plugged to the EMS to better source liquidity, limit market impact, and thus best meet the expectations of our clients.

In this regard, NTEX is taking advantage of the launch of a new dark pool at Euronext to enhance its setup and expand its market access offering.
Indeed, dark pools represent a relevant response to the natural evolution of the increasing search for liquidity, given this increased market fragmentation, the desertification of order books during trading sessions, and the growing preference of traders for a more anonymous type of liquidity (orders that are entered into the order book are not published).

Certain features of this new dark pool are noteworthy in terms of flexibility and operational efficiency.

For example, the scanning functionality enables orders from the dark pool to be moved to Euronext's central order book ("Lit"), thus ensuring a better liquidity allocation without latency.

Furthermore, the ability for orders in the dark order book to place reserved quantities (MES*** or MAQ****) can strengthen our ability to optimize our trading strategies, by seeking liquidity in a more targeted manner. The ability to interact with a block in the dark order book to optimize order execution is also significant.
Finally, this development highlights Euronext's commitment to remain at the forefront of innovation amongst stock exchanges, thus aligning with similar initiatives implemented by other major market players such as CBOE, SIX, and Nasdaq OMS. Xetra is expected to follow later this year.

We are committed to integrating this new initiative into our trading practices, while continuing to utilize all available liquidity pools in the best interest of our clients.

By Christophe Dupuy

HEAD of GLOBAL EQUITIES EXECUTION

* Order Management System
** Execution Management System
*** Minimum Execution Size
**** Minimum Acceptable Quantity

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