Buyside decries fragmentation...

By: Ray Pellecchia

File Under: MatchPoint, NYSE, NYSE Arca

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Traders magazine has a survey of buyside traders, pointing to the problems of market fragmentation. Excerpt:

According to the survey, which included 126 buyside firms, slower fills and inferior prices are the major trading issues associated with today's fragmented market.

At present, the buyside has so many execution venues--exchanges, ECNs and, particularly, dark pools--that their number makes it difficult to reach them all. And having so many venues reduces the amount of information available and makes it harder to trade blocks.

Of particular interest to me was the question, "If you believe fragmentation is a problem, describe the best solution." The answers:

Use more algorithms, smart-order-routing and DMA -- 31%
Develop better connectivity (between dark pools and exchanges/ECNs) -- 49%
More regulation -- 5%
Use high-touch sales trading -- 12%
Use capital -- 11%
Other -- 5%

There's a diversity of opinion there, but the overwhelming favorite is better connectivity between exchanges and dark pools, which is exactly what we're trying to do with our new NYSE Arca dark-routing initiative, MatchPoint, our upcoming joint venture with BIDS, and in Europe, SmartPool.

Exchanges are natural aggregators of liquidity, and we aim to help customers deal with fragmentation by re-aggregating dispersed liquidity. Much more to come on this front.

Hope you had a good Wednesday, folks. Today was an important and solemn day in our history:

Today in NYSE History
09 April 1968 -- The NYSE was closed for the funeral of the Rev. Dr. Martin Luther King, Jr.