After acquiring Bear Stearns (and its associated technology platforms), JP Morgan is now poised to launch a new dark pool called JPM-X.
It’s designed to be an all-out alternative trading system unlike its Lighthouse liquidity pool which was an internal network. JPM stresses that JPM-X will not offer flash orders – a hot topic in the world of HFT:
Traders: JPM-X, on the other hand, is an ATS. It is expected to be considerably larger than Lighthouse due to the acquisition of Bear Stearns. The deal brought to JP Morgan a large prime brokerage operation as well as Bear’s clearing and retail businesses.
In at least one critical respect, JPM-X will operate in fundamentally different fashion from Lighthouse: it will not transmit indications of interest.
“We do not send out IOIs,” Brett Redfearn, JP Morgan’s global head of liquidity, said at a recent industry conference. “We believe—just like flash orders—there is some leakage associated with the practice.”