(Corrects, due to company error, number of advisors in second paragraph to 2,300 from 2,500)
NEW YORK, May 20 (Reuters) - Stifel Financial Corp on Wednesday said it partnered with Nasdaq Inc on a new private stock trading platform set to launch in June that will match buy and sell orders from its institutional clients against its retail order flow.
The wealth management and investment banking firm is home to around 2,300 retail investment advisors, while also catering to 3,500 institutional clients, often referred to as buy-side investors, like hedge funds and long-only mutual funds.
Rather than just sending its retail orders to wholesale brokerages for execution, as it traditionally has, Stifel plans to make them available in its own alternative trading system (ATS), hosted by Nasdaq, opening up a previously untapped opportunity for institutional orders to trade against.
“We’re going to, for the first time, deliver a very controlled, unique source of liquidity to our buy-side counterparties,” John Spensieri, head of U.S. equity trading at the St. Louis-based firm, said in an interview.
Nearly every major bank has an ATS, also known as a dark pool, but Stifel, which traded more than 7.3 billion shares last year, said it is the first regional broker to launch this specific type of platform.
Dark pools are electronic trading venues that do not have to make information like trade sizes public prior to trades taking place, originally with the aim of getting large orders done with minimal price movement.
Dark pools have historically had less of a regulatory burden than public exchanges, but in recent years they have come under increasing regulatory pressure, driving up legal, compliance, and technology costs for the firms that run them.
Exchange operator Nasdaq unveiled its plan to host dark pools for brokers in 2016, outsourcing its technology and regulatory expertise. Goldman Sachs Group Inc was the first to sign up for the white-label product in 2017. (Reporting by John McCrank Editing by Paul Simao)
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