Appital, an equity capital markets technology solution, and Turquoise, the pan-European MTF, majority owned by London Stock Exchange Group, have launched Appital Turquoise BookBuilder.
This is the first buyside to buyside bookbuilding platform to give institutional investors the opportunity to proactively source liquidity. By bringing a historically highly manual and opaque process into an automated, electronic platform, they gain control over the entire bookbuilding process. Buyside firms benefit from liquidity discovery and price formation opportunities for illiquid equity positions, as well as the ability to execute large volumes on the regulated Turquoise MTF, often in multiple days’ ADV, with minimal market impact or risk of price erosion.
The European trading team of the world’s largest sovereign wealth fund, Norges Bank Investment Management, has successfully originated and executed the first trade, through a series of bilateral transactions.
The EMS vendors connected at the time of first trade include Flextrade, Factset’s Portware and TS Imagine. The deal executed successfully using Turquoise, with Bernstein as the executing broker. Multiple global asset managers participated as part of a series of bilateral transactions.
Appital Turquoise BookBuilder is a significant milestone in Appital’s mission to bring innovation and efficiency to the bookbuilding process. In the run-up to launch, Appital worked with forward-looking industry champions to develop the necessary technological infrastructure to support essentially a new liquidity discovery mechanism and workflow, integrating with EMS providers FlexTrade, FactSet Portware and TS Imagine, and executing brokers Bernstein and Instinet. Through the integration with Turquoise, buyside firms benefit from a single point of access and execution, with seamless straight-through-processing (STP) to more than 20 settlement destinations.
Mark Badyra, CEO of Appital, noted: “The launch of Appital Turquoise BookBuilder represents a step change for the asset management industry in the way they unlock and proactively drive liquidity in the market, ushering in a new era of automation in equity markets. From today, the buyside community has greater exposure to deal flow opportunities they have not been able to access before, and investors can interact with like-minded institutions in the liquidity and price formation process.”
Dr Robert Barnes, Group Head of Securities Trading & CEO Turquoise Global Holdings at London Stock Exchange Group, commented: “Appital Turquoise BookBuilder™ delivers the next significant efficiency for asset managers and contributors of capital. Where bookbuilding is the appropriate mechanism to find the right price for large block trades, Appital Turquoise BookBuilder innovates with the world’s first automation of buyside bookbuilding seamlessly integrating STP trading to settlement.”
Norges Bank Investment Management completed the first successful trade via Appital Turquoise BookBuilder, validating the new buyside workflow, from driving demand, to bookbuilding, allocation, deal distribution and execution. Since inception, Norges Bank Investment Management has been instrumental in refining this service, from feedback on integration with broker-neutral execution and order management system FlexTrade to shaping the visual interface for a smooth user experience.
Emil Framnes, Global Head of Trading and Transition at Norges Bank Investment Management commented “Unlocking latent liquidity and executing multiple days’ ADV is essential to achieving our investment objectives. We welcome Appital’s innovative peer to peer access of hard-to-find liquidity and executing large volumes using Appital Turquoise BookBuilder without market impact or the risk of price erosion. Appital’s intuitive interface and integration made adoption easy.”
Greg Bennett, Chair of Appital and former Head of Capital Markets for EMEA & Americas for Fidelity International commented: “Liquidity has been a systemic issue in the equity markets for years. Given the evolution of the electronification of markets, we have demonstrated that we have been able to both reverse the trend of shrinking trade sizes and offer the next evolution in the market for size with Appital Turquoise BookBuilder.”
Appital Turquoise BookBuilder enables the buyside community to have full transparency and maximum control over the bookbuilding and deal distribution process:
- Deal originators have real-time visibility of the entire life cycle of the bookbuilding process, allowing them to make distribution adjustments throughout.
- Deal participants can highlight the types and sizes of opportunities they are looking for, specifying market, sector, market cap and size of interest.
- Institutional investors set their own preferences to ensure they are only exposed and alerted to relevant liquidity, and interact bilaterally with each like-minded institution on the other side of the trade in the liquidity and price formation process.
- Appital’s distribution methodology is automated, highly efficient and unconflicted, delivering a fair outcome to all market participants, driven by buyside preferences.
- Smaller firms looking to trade large blocks, that would historically be excluded from the relationship-driven bookbuilding process, are now able to participate in the liquidity formation process. They gain exposure to deal flow opportunities previously not accessible to them, to actively drive liquidity in the marketplace.
- Appital Turquoise Bookbuilder™ captures the demand and supply curve, achieving the right price for the respective trade size. After that, Turquoise Trading members supporting Appital Turquoise Bookbuilder™ are made aware of the liquidity opportunity and submit trade slides for affirmation onto the bespoke Block Trade Facility (“BTF”) designed by Turquoise. Following affirmation of both trade sides by Turquoise, straight through processing of execution to settlement occurs via Turquoise for on-time delivery into the right settlement destination, plus broadcast of post-trade price discovery fully compliant with transparency requirements.
Badyra concluded: “We have seen fantastic support for our mission to bring innovation to equity markets and are grateful to all the industry champions who have helped us deliver a new workflow for the buyside, giving them full control over the bookbuilding and deal distribution process. We look forward to continuing our collaborations to the benefit of the industry and making our platform available to an increasing number of global and local asset managers.”
Over 30 asset managers, collectively managing more than US$30 trillion, are in the process of joining Appital, a number that is set to increase significantly now that Appital Turquoise BookBuilder is live. What’s more, Appital is proactively engaging with European asset managers to increase the depth of available opportunities and liquidity within the platform.
Source: Appital
