George Hessler, CEO
The difficulties surrounding block trading in an increasingly regulated U.S. equities market have been a growing problem for the industry. While institutional traders prefer block trades to minimize market impact, the average trade size on the New York Stock Exchange is still around 200 shares. Because of built-in disincentives at many trading venues, large trades are often split up into smaller orders.
In light of the current scenario, New York-based Magma Trading is redefining the existing trading paradigm with their state-of-the-art Magma ATS, an alternative trading system. Magma’s solution is breaking new ground as it brings forth a unique platform and trading venue that allows liquidity providers and institutional broker-dealers to engage in large block trades electronically and anonymously. As such, the Magma platform is currently the best way to access liquidity quickly and efficiently for large trades. It eliminates disincentives for block trades and improves the chances of profitably executing a trade for market makers, without the fear of getting run over by electronic sweeps.
The Magma platform allows broker-dealers to aggregate liquidity found at national exchanges and other trading venues and displays block liquidity from liquidity providers, enabling buyers and sellers to trade transparently. It is a high-speed platform, with robust infrastructure, allowing traders to access liquidity within milliseconds. “Until now, basic algorithmic strategies have been used across the equities market, but we believe that traders are becoming more knowledgeable about how to use technology to access the markets more efficiently. Magma’s advanced features allow brokers and buy-side clients to take advantage of block liquidity with trust and ease of access,” remarks George Hessler, CEO of Magma Trading.
Magma’s solution allows liquidity providers and institutional broker-dealers to engage in large block trades electronically and anonymously
Getting started with Magma is a simple process. Clients can connect through Magma’s trading partners and trade on the platform through their existing execution management or order management technology systems. “All of our agency/ institutional broker-dealer clients can use the platform within minutes if they have a connection with one of our algorithmic providers. In cases where clients want to establish a separate, direct connection, it takes a week to onboard,” explains Hessler.
To better highlight Magma’s value proposition, Hessler recalls an instance where a liquidity provider with substantial resources didn’t have access to an efficient distribution structure or connections with institutional broker-dealers. With the Magma platform, the client was able to reach out to a wider range of broker-dealers and attain viable distribution as well as enhance execution quality.
Although Magma’s trading system has been live only for a few months, it’s creating a significant buzz in the marketplace. “Some of the largest broker-dealers are beginning to work with us and we are already seeing over ten billion shares per day of liquidity from our clients,” asserts Hessler.
Behind Magma’s innovative system is a team of industry veterans who have held eminent positions in several large Wall Street technology and trading firms and have over two decades of experience to add to their credibility. It comes as little surprise that Magma was the 2018 winner of the Harvard Business School New Venture Competition in New York, securing first place among 34 participating companies.
Going forward, Magma will further enhance their platform by developing additional features and order types, all designed so that institutional broker-dealers can access liquidity more efficiently. “We plan to build on our aggressive start and continue increasing our market share. In a year from now, we see ourselves as a major trading platform for block market-making in the U.S. market,” says Hessler.