Ballista Prepares to Launch Options Liquidity Pool
May 5, 2008
Ballista, a privately held venture founded in June, is touting its soon-to-launch equity options pool as the "first ever" for block trades and delta-neutral transactions, offering electronic access to public and non-public liquidity.
The New York-based platform, which said in April that it had successfully completed several proof-of-concept trades, expects to launch this month via a private broker-dealer, pending regulatory approval.
Ballista says it will offer traders searching for liquidity the ability to communicate directly with counterparties. The platform, which aggregates liquidity found on exchanges and flow provided by market-makers, banks and hedge funds, will be available as a stand-alone, software-based system, or through a FIX-based interface.
CEO Robert Newhouse explained that Ballista was built to "de-fragment the options market by offering access to multiple execution venues, and at the same time, aggregate passive liquidity by bringing market participants into our system so they can actually have a formal place to post their interest to trade."
Newhouse, who was previously CTO of New York-based Torc Financial, developer of the TradeSpeed system, said he believes "Ballista's ability to aggregate public and non-public liquidity via a single electronic platform ... will significantly enhance liquidity-sourcing efforts throughout the options community." The platform is slated to enter beta-testing shortly and a few customers will be on the system prior to the official rollout, said Newhouse.
Though sell-side options desks may see Ballista as a rival, Newhouse, who said he does not see any true competitors on the horizon, stressed that the platform "really is a liquidity pool. ... We are simply there to offer liquidity to any initiated order. So while I believe the brokers will view us as a competitor, the premise is we really are not competing with them--we [offer] liquidity to anyone, including brokers."
Ballista says that it features a proprietary post-auction negotiation process in which counterparties are placed in a private facility to hash out price and size parameters.
Newhouse noted that the International Securities Exchange (ISE) and Chicago Board Options Exchange offer order types that will allow Ballista to electronically cross orders once they are matched on the platform.
An ISE spokesperson said that as an exchange member, Ballista will have access to all ISE order types. "We have a number of order types available to enable members to cross order flow, such as facilitation and solicitation orders," she said. "Members can execute complex strategies, such as multi-legged spreads and spreads with stock--buy-writes and delta-neutral trades--using these order types as well. Ballista would be able to enter trades the same way any other member can."
