Bloomberg says it has signed deals with an undisclosed number of operators of dark pools to allow asset managers and hedge fund customers to view in “real-time” how their trades have been matched in the pools.
An algorithm developed by Bloomberg Tradebook called B-Dark is able to give traders real-time information on where their orders are being filled. That “provides additional insight and enables more informed decisions about where to direct order flow and discretionary trades rather than shot-gunning across many venues,” according to Bloomberg.
Aimed at traders of small and mid-cao equities, B-Dark specifies the level of aggression with which the algorithm will seek dark liquidity. In addition, B-Dark provides anti-gaming logic, including order randomization and real-time venue slippage analysis, to protect traders from the toxic flow that sometimes resides in dark venues.
“For far too long the buy-side has tolerated a critical lack of information when trading in dark pools and that needs to change,” says Raymond M. Tierney III, chief executive officer and president of Bloomberg Tradebook, Bloomberg’s agency brokerage firm. “We are encouraged that dark pool providers are joining us to ensure that dark liquidity and algorithmic trading is safer, more fair and open throughout the industry.”
Bloomberg’s move comes at a time when fund managers are growing concerned with the rise of high-frequency and other types of algorithmic trading which are picking off parts of their large orders. Bloomberg says that while other brokers such as Investment Technology Group do provide this type of information to clients it is only on an end-of-day rather than real-time basis.