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Liquidnet, the institutional investment community that enables secure and anonymous block trading of equities, is expanding its trading operations to include New Zealand listed securities.
Liquidnet will commence trading of New Zealand equities on Tuesday, 22 June 2010. It is believed to be the first time an alternative trading venue has offered electronic trading access to equities listed in New Zealand.
Co-Head of Liquidnet Australia, Sam Macqueen, said the decision to facilitate New Zealand equities trading was led by strong demand from Liquidnet's asset manager members who find the local market restrictive when it comes to trading large volumes of stocks.
"Our members face significant market impact costs when trading NZX-listed stocks because wholesale-sized trades in a small market can cause dramatic price changes," Macqueen said.
"Fund managers wanting to invest in NZX-listed stocks are effectively penalised for their size."
Liquidnet's expansion to New Zealand follows the group's successful establishment in Australia.
Since its Australian launch in February 2008, Liquidnet Australia has grown a liquidity pool of A$1.7 billion, representing the average daily liquidity of the 180 members enabled to trade Australian-listed securities.
In Australia, Liquidnet's average trade size during the first quarter of 2010 was A$1.2 million-116 times greater than that of the ASX.
Stephen Zilioli, Co-head of Liquidnet Australia, said Liquidnet instantly alerts members to potential trade matches via Liquidnet's electronic trading platform, empowering them with control over the execution process and reducing their reliance on external brokers.
"We bring together natural buyers and sellers of large blocks within a secure environment where they do not need to mask or break-up their wholesale volumes, or leak order flows to brokers," Zilioli said.
"By eliminating many of the trading risks faced by institutional investors, we enable more trading, which in turn produces greater liquidity.
"For the New Zealand market, where lack of actionable liquidity is a problem for institutional investors, we believe Liquidnet will increase trading in securities listed on the New Zealand Exchange, helping it to retain and grow overall market liquidity."
Liquidnet now offers trading access to 36 equities markets around the world, with New Zealand and Mexico the most recent markets to launch. New Zealand will become the sixth market accessible in the Asia-Pacific region, joining Australia, Hong Kong, Japan, South Korea and Singapore.
During the first quarter of 2010, these markets traded a record volume of US$3.75 billion.
In addition to New Zealand and Mexico, Liquidnet also recently commenced trading in the eastern European markets of Poland, Lithuania, Estonia and Slovenia.
