Nine large asset management firms are launching a new equity trading venue, Luminex, designed to facilitate anonymous block trading.
The firms announced the launch Tuesday, explaining that the new venue aims to help institutional investors more efficiently source block liquidity through transparent trading protocols. It will be open to “any investment manager primarily focused on the long term and with a desire to trade large blocks of stock with other investment managers”.
The venue will be a dark pool operating with transparent trading rules and protocols designed to minimize information leakage and protect the anonymity of trades. Institutional investors that use the venue will also have full transparency into the platform’s user-base, it says. “Through Luminex, investment managers will have the ability to transact with one another in a lower-cost trading environment creating the opportunity to pass along the benefits of those lower costs to their clients in the form of potential improvements in portfolio performance,” it says.
The new company, Luminex Trading & Analytics LLC, will operate as an independent entity, managed by a senior leadership team and governed by a board of directors that includes one representative of each of the firms — BNY Mellon, BlackRock, Capital Group, Fidelity Investments, Invesco, J.P. Morgan Asset Management, MFS Investment Management, State Street Global Advisors, and T. Rowe Price. It will open for trading in 2015.
“Despite significant improvements in the overall efficiency of today’s equity markets, sourcing block liquidity remains a complex and challenging endeavor for investment managers,” said Michael Cashel, interim-CEO of Luminex.
“Luminex is a well-capitalized, independent platform providing a low-cost solution to that challenge while putting investors’ interests first. Our goal is to build trust among users through transparent trading rules and protocols and efficient execution,” he added. “Investment managers have a responsibility to continuously search for ways to better serve their clients. Luminex facilitates that effort by seeking to deliver a lower cost and more efficient block trading experience to provide improved portfolio performance for investors over the long-term.”