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Fidelity Capital Markets Introduces BLOXSM, a New Block-Trading Capability for Institutional and Individual Investors
New Execution Venue Provides Size and Price Improvement Opportunity in a Safe Transaction EnvironmentBOSTON – Fidelity Capital Markets, the institutional trading division of Fidelity Investments®, today announced that it has created a new execution venue focusing on block trades. BLOXSM (Block Liquidity Opportunity Cross), an extension of the company’s alternative trading system (ATS), CrossStream®, is available to fundamental investors, including institutional and retail firms.
Traders are increasingly interested in executing block trades to improve execution quality; however, they have growing concern over execution opaqueness, information leakage and liquidity control. According to the TABB Group, high fragmentation and low volume in the equities markets create significant challenges for buy-side traders to find good liquidity and fulfill best execution obligations.1 In addition, given their size and depending on other market factors, block trades can affect the price of a security. These concerns have traders seeking venues that are safe and can offer unique liquidity. BLOXSM offers an environment for investors to seek price and size improvement with confidence and minimal market impact.
“In today’s competitive trading environment, fundamental investors are looking for a venue to conduct secure and fair transactions, while also achieving price and size improvement,” said John Donahue, senior vice president, head of equity trading at Fidelity Capital Markets.
“Additionally, many of our institutional clients have been asking for improved workflow for conditional interaction. BLOXSM supports that functionality, and is yet another example of how we are continuously innovating to improve our clients’ trading experience,” said Donahue.
In order to safeguard the integrity of the venue, Fidelity is selective with regard to the participants who have access to BLOXSM. The venue offers institutional investors the ability to interact with orders from Fidelity’s retail brokerage business -- 34 percent of the shares coming from its retail brokerage business are considered block size.2 This allows Fidelity’s institutional clients to leverage the liquidity of Fidelity’s retail brokerage business, which trades approximately 535 million shares on average per day, as well as other firms whose order flow is handled by Fidelity. And for individual investors, Fidelity’s routing provides access to institutional liquidity aimed at gaining price and liquidity improvement. Bringing together these two sets of investors provides a select marketplace focused on a safe environment and best execution for both parties of a trade.
Through Fidelity’s ATS, CrossStream®, BLOXSM anonymously matches Fidelity clients’ orders against the diverse order flow of Fidelity’s brokerage businesses, without publishing bids and offers and before clients’ orders are routed to the market. All executions occur at midpoint, which provides price improvement for clients’ trades. In addition, BLOXSM offers functionality to fit into current trading workflows which will enable investors to increase exposure and block interaction via a conditional order type.
“Our success is based on the execution quality we can achieve for our clients,” said Donahue, “and we are committed to helping them accomplish their trading objectives.”
About Fidelity Capital Markets
Fidelity Capital Markets (FCM) is the institutional trading arm of Fidelity Investments providing trading products and services to a wide array of clients and Fidelity businesses. FCM executes domestic and international equity securities including block and portfolio trading, listed options and foreign exchange. It offers securities lending and commission and transition management. Fidelity Capital Markets trades fixed-income principally in a wide range of taxable and tax-exempt securities and underwrites municipal and government agency debt and bank issued brokered CDs. FCM has its own distribution channel, Fidelity Prime Services®, focused on servicing hedge funds and a full suite of electronic brokerage trading products, including proprietary algorithms and our own crossing network, CrossStream®. FCM offers all of our clients’ advanced trading, execution excellence, transparency and personal service. For more information about Fidelity Capital Markets please visit www.capitalmarkets.fidelity.com.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.8 trillion, including managed assets of $1.6 trillion, as of October 31, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
1) Miranda Mizen, Principal, Director of Equities Research, TABB Group.