Eighty-four percent of institutional equity traders are either “concerned” or “very concerned” about sourcing liquidity in the current market, according to a Liquidnet survey.
Access to liquidity was rated by 77% as important for buy-side firms when selecting a trading venue, followed by trust at 68% and transparency at 50%. Respondents could select more than one answer.
Also, two-thirds of U.S. and Europe, Middle East and Asia traders expect an increase in equity inflows in 2015, and 65% said market confidence will be what triggers those increased inflows. Only 10% said inflows would result from a rise in interest rates.
Brennan Warble, head of U.S. sales at dark-pool provider Liquidnet, said in an interview that most traders thought any rate increase wouldn’t be what led to increased equity inflows. The question was “in the context of expectations that there’d be a great rotation into equities,” Mr. Warble said. Investors “aren’t waiting around for rates to rise to put more into equities.”
Among other findings, 76% believe high-frequency trading strategies negatively affect some of their orders, and 88% were concerned about predatory traders in some dark pools. Sixty-seven percent said broker or venue conflicts of interests were a high concern.
About half of those surveyed believe consolidation in trading venues is inevitable, particularly among U.S dark pools, whose number they expect to decrease by an average 33% by 2016, to a total of 30.
The survey was conducted over five weeks ended Jan. 12.