SIX Swiss Exchange Details New Dark Pool

On October 18, SIX Swiss Exchange launched its new dark pool, which allows users to get midpoint execution.

It has been added directly into the matching algorithm of the lit order book, allowing SIX to introduce and implement a sweep order.

Robert Cranston, head of equity product management at SIX Swiss Exchange, tells WatersTechnology that this sweep order allows users to look for midpoint execution on their way to the lit order book.

"It allows users to cross over between the two books and use them with one order," he explains. "But users can also enter orders directly into that midpoint order book."

As Cranston explains, the midpoint is a guarantee midpoint of primary that's been on offer.

"It's sitting in the same matcher as the primary book, so you are always going to get the exact midpoint at that point in time," he says. "For your executions, it allows you to put in resting orders with a minimum order size."

Cranston says the sweep order is one of the most frequently used features in the new dark pool, as it bears no risk or additional costs.

"If you're routing to the lit order book and looking to aggressively take a price out of the order book, it allows you to look for price improvement with no additional cost," he says. "The execution cost would be the same as if you had traded that order into the lit and it allows you to look for midpoint execution on the way without any opportunity cost."

SIX says its new dark pool is not going to be subjected to Mifid II, so there will be no volume caps on its platform.

"Our view is that we have an equivalent regime to what runs under Mifid," says Cranston. "Our view is that the transparency issues that the volume caps are being used to address are not present in Switzerland due to differing current regulatory structure."