In Conversation with Rob Laible
You’ve been in the Global Head of Equities’ seat since March. Can you share a bit about your plans for the business?
As I look back almost seven years ago to when I first joined Liquidnet as Global Head of Execution & Quantitative Services (EQS), I realize how much my role has changed and our Equities business has evolved over time. I was most recently Chief Operating Officer before taking on the role of Global Head of Equities, when the deal with TP ICAP closed at the end of March 2021.
The smooth transition afforded me time to reflect on our business and to solicit input. I spent my first 90 days mostly listening. Being able to understand what was working, what was not working and what impediments hampered our business allowed me to identify opportunities for success.
We have long championed the essential role of agency-only broker — for being a source of liquidity across the globe and its potential for generating trader alpha. Going forward, we will continue to evolve, innovate, and strive to be even more client driven.
The Equities franchise will pursue those growth opportunities, taking advantage of our core competencies including our global footprint and our client-tailored solutions. In true Liquidnet fashion, these will be supported by innovative technology and a superior client service experience. Underpinning all this is, of course, the trust that our buy-side Members place in us and the extended network effect that the sell side brings to the equation.
Liquidnet is a trusted brand built upon the partnership we have forged as a Member community, and a leading unconflicted agency broker. I want to build on this legacy and invest in our core businesses, which we are in a position to do with the support of TP ICAP.
Can you talk about these investments?
Driving these investments is our commitment to solidify our foundation to fuel future growth, while continuing to innovate and help our clients generate actionable alpha. To that end, and in addition to strengthening our EQS solution suite, which currently represents approximately 35% of our business, we are investing in and modernizing our Core Crossing product.
We have improved much of our technology stack. Specifically, we have made upgrades to our FIX gateways, matching engine, and messaging bus optimizations resulting in enhanced performance and improved firm up rates.
We have also simplified the front-end user experience and have introduced client-driven automation as well as the ability to do multiple matches and targeted invitations from the same, easier to use, window. This gives the ability to our Members to access more liquidity via quicker interactions and a more streamlined negotiation process.
Additionally, we have improved the quality of our pool. One of our key differentiators is our unique global liquidity, unlike some of our competitors in the crossing space who are in a limited number of regions. With $89B of average daily liquidity* across 46 equity markets, we continue to invest in bringing on new sources of liquidity while also ensuring it is actionable liquidity. For example, we recently completed a comprehensive review of our broker Liquidity Partners to protect and enhance the trading experience.
Last but not least are our people. In an era where trading desks are asked to do more with less, we are very proud of our ability to support our Members with expertise and insights through our experienced team of execution consultants and trading professionals. As such, we have made a number of key hires to fortify our high touch institutional coverage client service model.
Liquidnet prides itself for being a leader in institutional investment technology. Any innovations in the pipeline?
Absolutely. Innovation is in our DNA, and the sophistication and global nature of our business demands sustained innovation. We want to continue to leverage technology and invest in our core platform to build scale for our Members.
We recently launched Trade at Last in EMEA and it has been very well received. In fact, we recorded our largest trade, over $20m notional — equivalent to 100+% ADV in a FTSE 100 name — done at the closing price in one print. In the US, our Enhanced Close Algo will launch later this year which looks to trade optimally into and on the close using proprietary modeling and optimization techniques.
There has also been a notable shift in the market towards automation, a journey we started by collaborating with the buy side over six years ago. We have now embedded analytics and market insight directly into our front-end infrastructure and EQS business, which allows us to strengthen our high touch client coverage model as well as bring differentiated signals into our Algo suite, resulting in overall better trading performance that is measurable. We are also introducing customized rules-based trading solutions, systematic trading capabilities that allow our Members to embed low and high touch automated solutions directly into their trading infrastructure.
In APAC, our EQS business continues to grow from strength to strength, and with the heightened focus on benchmark algos, I believe our pre-opening VWAP Cross is going to be the next big thing.
Written by Rob Laible, Global Head of Equities
* As of Q1 2021