FAQs

What are dark pools?

Dark pools are crossing networks that provide liquidity that is not displayed on public order books. They offer institutional investors many of the efficiencies associated with trading on the exchange’s public limit order books, but without revealing their intentions to the open market since neither the order price, order size nor the identity of the trading company are displayed.

What are the benefits of trading in the dark?

Institutional investors and intermediaries demand the ability to trade without full pre-trade transparency, because it enables them to execute business without the costs associated with the market impact of advanced knowledge of their trade. Coupled with a substantial reduction in the average trade size on the lit markets, dark pools have emerged in response to these changing client needs where one size no longer fits all.

Because not all transactions are suited to the public limit order book, SmartPool provides institutional investors who want to trade promptly, anonymously and in bulk, the opportunity to carry out their transactions:

• With reduced market impact

• At improved execution prices, through our mid-point matching algorithm

• With the most diverse trading community in Europe.

What is the history of SmartPool?

SmartPool was launched in February 2009, in response to recent fundamental changes in the European exchange landscape that have changed the way business is executed, and encouraged the emergence of alternative trading venues such as dark pools. These changes, including liberalisation, deregulation, and technical advancement have led to the successful entry of low-cost, entrepreneurial rivals. This new competition is intent on taking full advantage of the liberalisation and deregulation of the markets, and challenges the current status quo.

The average trade size on lit venues (those that have a publicly displayed order book) in Europe has also decreased steadily, with the average trade size on the main European exchanges dropping below €10,000 for the first time. This means firms are struggling to find on these systems liquidity in what traders call “size.” While public limit order books continue to serve the ‘vanilla’ segment of the market very efficiently, one size no longer fits all.

How does the platform fit into the broader NYSE Euronext European cash market portfolio of services?

Because not all transactions are suited to the public limit order book, SmartPool is a complementary service to the NYSE Euronext public limit order book and specifically targeted at trades larger than average size, charging a premium for the dark value proposition.

How are you regulated?

SmartPool Trading Limited is a Multilateral Trading Facility (MTF) approved and regulated by the Financial Services Authority (FSA). As an exchange-led venue SmartPool lives up to the highest standards of regulatory supervision and investor protection.

What securities are currently traded on SmartPool?

SmartPool offers trading in all major blue-chip and selected mid-cap indices across 15 European equity markets, including securities listed on the four NYSE Euronext European markets. The total number of securities traded on SmartPool now exceeds 2,200, representing a 110% increase since launch. Please refer to www.tradeonsmartpool/DocumentLibrary for the latest instrument list.

Trades are cleared via EuroCCP for all European markets traded on SmartPool. Front-end solutions are currently available from Fidessa, SunGard, ULLINK and Quod Financial.

How much does it cost to start trading on SmartPool?

SmartPool does not charge a membership fee and no additional fees are applicable to clients already connected to NYSE Euronext through the Universal Trading Platform (UTP). The trading fee structure can be found here:

http://www.tradeonsmartpool.com/Assets/Documents/051011SmartPoolInfoFlashPricing.pdf?1330432853

How are orders priced on SmartPool?

Orders on SmartPool are executed at the imported mid-point price of the primary reference market.

How is SmartPool post-trade data published?

SmartPool automatically publishes trade executions in line with MIFID regulation.
SmartPool transactions are published through the NYSE Euronext OTC data feed using the Market
Identifier Code (MIC code XSMP).