Like a phoenix rising from the ashes of its former self, KCG Holdings has rebranded and relaunched its dark pool website and the pool itself.
KCG Holdings announced today the new launch of its ATS – MatchIt. KCG told Traders the pool has been updated and is designed to promote transparency, make using the ATS easier and bring more transparency to the marketplace.
KCG, in a former life, was Knight Capital and had its two dark pool-type platforms, Knight Link and Knight Match. All was good. But then on Aug. 1, 2012, things turned on a dime as a the firm built up a gross position of $7 billion in just 40 minutes as it lost control of one of its algorithms at the New York Stock Exchange.
As a result, the market maker lost $457.6 million getting out of those trades, pushing it to the brink of collapse. If not for the willingness of a group of broker-dealers to come to its rescue, Knight would have ranked as one of the industry’s most spectacular flameouts.
That was then. And this is now.
Shaking off its older self, securing financing and picking itself up by its own bootstraps, the firm has refilled its Form ATS and rebranded its Knight Match dark pool to KCG MatchIt. Following the example set by IEX and other dark pools in the current market environment, KCG is offering clients a level of transparency that just a few years ago was unheard of, allowing users to see daily trade information, pricing and other data.
According to Erica Attonito, overseer of MatchIt, said that after a strategic review following the GETCO/Knight union, KCG decided it still wanted to have an ATS to provide its clients liquidity. Once that decision was made, the rebranding took a couple of months – which included renaming the ATS, re-filing the form ATS and the waiting time required for approval.
The pool represents the next evolution in KCG’s U.S. equities alternative trading system (ATS), which now offers investors more comprehensive data to make better informed trading decisions.
“MatchIt provides the firm and its subscriber clients with another way to access liquidity in today’s marketplace,” Attonito said. “Plus, as supporters of the competition and innovation embodied by Reg ATS, we believe there is value in operating a venue that provides clients with the option of crossing their orders with other non-displayed client orders in a transparently structured, regulated setting.”
MatchIt is designed to serve as trading utility for clients, she added, noting its average daily volume of 40 million shares. It is not looking to take on its larger brethren such as Liqudinet or BIDS but rather allow users a more customizable experience.
With MatchIt, KCG is now making a broad swath of venue-specific information widely available on its website, including the current and historical form ATS, daily volume, pricing, subscriber agreement, and operational specs. And everything is in easy to read language.
KCG will also continue to invest in MatchIt’s technology to enhance the trading venue’s functionality and capabilities for clients.
In 2014, KCG decommissioned GetMatched in order to reduce fragmentation of order flow and focus on the evolution of the Knight Match ATS. This rebranding represents the first phase of that process.
The firm still has the Knight Link platform, which is not an ATS, which provide KCG clients with access to the firm market making ability. Knight Link executes approximately 70 million shares per day on Knight Link, according to Attonito.
“We’ve taken stock of the equity landscape in the dark pool space and adjusted accordingly,” Attonito said. “For us, after the strategic review, it was decided that we didn’t want to shut the pool down, rather we wanted to respond proactively to the industry’s demands for transparency while preserving the option for clients of sourcing liquidity in a regulated, off exchange setting.”
