UBS Investment Bank intents to launch a new multilateral trading facility (MTF) for crossing orders in European stocks.
The new UBS MTF will be a non-displayed orderbook, featuring a Central Counterparty (CCP) model. As a 100% dark liquidity pool, there will be no pre-trade signalling risk or display of any kind. Executions completed in UBS MTF will be reported post-trade in real time to Markit BOAT.
The MTF will launch offering mid-point matching based on the price of the primary market. Its CCP model will assist clients in mitigating counterparty risk and contributing to reduced settlement costs.
UBS MTF will be open to external members, implementing an objective membership access and order prioritization policy. The MTF will operate with segregated management and supervision, adhering to the firm’s confidentiality standards and maintaining separation from the rest of the firm’s execution businesses and other internal trading desks.
As a new external non-discretionary pool, UBS MTF was developed to support access to an array of sources of liquidity for its members. UBS clients are expected to benefit from access to additional liquidity, complementary to UBS’s existing internal discretionary crossing for client orders in UBS Price Improvement Network (UBS PIN).
Robert Barnes, head of market structures at UBS Investment Bank, said: “As we developed the architecture and interactivity model for UBS MTF, we were committed to greater simplicity, lower transaction costs and reduced market impact.”
Tim Wildenberg, head of direct execution services of EMEA at UBS Investment Bank, said: “The new UBS MTF will now give clients access to an additional, even more diverse pool of liquidity. Based on our experience with our alternative trading system in the US, we believe the MTF will offer incrementally improved crossing opportunities while still providing reduced signalling risk and measurable spread savings. All without requiring clients to do any additional work or change their trading strategies.”
However, the launch of MTF is pending for regulatory approval from the UK Financial Services Authority.