| NEW YORK
NEW YORK Dec 10 Nasdaq OMX Group plans
to create a so-called dark pool for electronic U.S. Treasuries
trading where buying and selling interest is not revealed, even
on a post-trade basis, the company's chief executive officer
said on Tuesday.
Nasdaq, which runs the No. 2 U.S. equities exchange, closed
its $750 million acquisition of eSpeed, an electronic
Treasuries-trading platform formerly run by BGC Partners Inc
, in July.
Over $500 billion of U.S. Treasuries change hands daily.
For large orders, traders often go through "voice brokers,"
who execute trades over the phone, so that the size of the order
is not made public, protecting the trader from what would be a
competitive disadvantage. Going through a voice broker can be
more expensive than trading electronically.
Nasdaq intends to create a dark pool for Treasuries within
the eSpeed platform, CEO Robert Greifeld said at a financial
services conference held by Goldman Sachs. Dark pools are
common in the equities markets and are usually private markets
where quotes are not displayed in the broader public markets.
"That is somewhat unique and that represents what
essentially is done in the voice world today," Greifeld said of
The Treasuries dark pool offers Nasdaq the opportunity to
attract more customers and more trades to its platform, thus
Nasdaq has been focused on upgrading eSpeed's technology to
reduce trading times and on rebuilding relationships with the
big banks that use the platform, Greifeld said.
The goal is to get eSpeed's market share of benchmark
Treasuries up to 40 percent from its current share in the low-30
percent range now, he said.
"Just in the past several days, we've seen some encouraging
signs," he added.
Nasdaq plans to move eSpeed's data center to the main Nasdaq
data center in Carteret, New Jersey, in the first quarter and
then will focus on introducing new products. ESpeed operates a
central limit order book that currently trades U.S. Treasury
bonds with maturities between 2 years and 30 years that are
on-the-run, meaning they are the most recently issued bonds or
notes of a particular maturity. In 2014, Nasdaq is looking at
bringing off-the-run securities to its platform, Greifeld said.
He said he expects Treasury volumes to increase once the
U.S. Federal Reserve begins tapering its $85 billion-a-month
bond-buying program, known as quantitative easing, aimed at
stimulating the U.S. economy.
"We expect the taper to happen, in our planning, sometime in
2014 - whether that's December or January, we obviously don't
know, but I think that's a latent positive for us," he said.
Nasdaq has no current plans to use eSpeed as a platform to
build a swap execution facility (SEF), he said. SEFs are new
exchanges for over-the-counter derivatives that are required
under the Dodd-Frank financial reforms act, with the aim of
making the $633 trillion swaps market more transparent.