As exchanges and multi-lateral trading facilities (MTFs) in Europe increasingly look to complement displayed liquidity with dark pools, SWX was the first out of the blocks with its Swiss Block neutral non-displayed block trading service for Swiss blue-chip securities.
Operated by SWX and developed in partnership with Nyfix, the service went live in August 2008 with 11 organisations on board: ABN Amro Bank as subsidiary under taking of The Royal Bank of Scotland Group, Bank Vontobel, Citi, Credit Suisse, Deutsche Bank, Instinet Europe, Lehman Brothers, JPMorgan, Merrill Lynch, Nyfix International and UBS.
The diversification of the traditional lit order book with the addition of a non-displayed pool offers the benefits of deep liquidity combined with minimised information leakage, better prices for block trades, reduced market impact and onward routing of unexecuted orders to the public limit order book as appropriate. SWX Swiss Block also operates a unique dual Central Counterparty (CCP) model for post trade processing, which offers participants a choice of clearing and settlement venue.
SWX Swiss Block has been developed to reflect the diversification of trading strategies and demand for additional solutions in Swiss blue-chip trading. By complementing SWX Europe's existing public limit order book, this neutral service helps investors and intermediaries to execute wholesale business with minimal market impact and at improved prices.
Finextra verdict: While other exchanges have taken a long time to build partnerships, appoint management and implement technology to move into non-displayed liquidity, SWX proved a far more nimble organisation and has paved the way for others.