Geneva, Illinois-based Fox River Execution, a broker/dealer providing algorithmic trading technology and execution solutions, has launched a new ETF trading platform designed to provide investors with an accurate, real-time assessment of ETF liquidity and pricing. The new platform, known as Fox Spotlight, utilizes proprietary trading technology that was developed by Fox River in collaboration with iShares.
Fox Spotlight provides insights into both the liquidity of an ETF as well as the liquidity of its underlying securities, allowing investors to minimize the market impact of ETF trades. Fox Spotlight calculates dynamic, real-time limits to sweep and post in the ETF displayed market, and also provides price and size discovery for all size trades through an ETF trading system. The new platform also enables authorized participants, market makers, and arbitrageurs to compete with each other, resulting in improved execution and pricing in ETF transactions.
This latest development in the ETF industry will likely go unnoticed by the vast majority of investors, but could have a significant impact on liquidity for major institutional investors. “ETF trades previously considered too large for the market in relation to their average daily trading volume can now be executed with confidence, thanks to the total market impact view that Fox Spotlight offers,” said Terry Ransford, Director of Trading & Technology at Northern Trust Securities.
While the obvious beneficiaries of this development are large, institutional investors, the introduction of Fox Spotlight could benefit smaller investors as well. The ability to execute large transactions with improved efficiency will make institutional investors more comfortable in the ETF market, which will lead to improved liquidity for all, regardless of size.