The HFT Blowback Continues: Fidelity Creates New Trading Venue

Tyler Durden's picture

In what the firm believes will be an improvement over other so-called dark pools because it will be a collaboration among big mutual-fund firms, WSJ reports that the giant fund manager is quietly building a new trading venue designed to let big money managers sidestep many of the problems that they argue lead to unfair or costly trading - i.e. avoid the HFT predation. Fidelity, with $1.95 trillion of assets under management, is in the initial stages of planning the trading venue and has just begun to pitch the idea to other large asset managers. It seems 5 years of vociferous exposure and a Michael Lewis book may be beginning to starve the HFTs of their prey.

 

As WSJ reports,

The venue, if successfully launched, would represent an ambitious effort to reduce costs and streamline trading for the investment firms. The project is tentatively named "Sakura," which is the Japanese word for cherry blossom, according to people familiar with the matter.

 

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Plans for "Sakura" are emerging alongside a broadening debate about the fairness of the U.S. equity markets. Discussions have been stoked in part by a new book by Michael Lewis that alleges the markets are "rigged" in favor of exchanges, high-frequency traders and big banks at the expense of retail and institutional investors.

 

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The new trading system would be different from the dark pool already operated by Fidelity called CrossStream.

It seems, the guys at Goldman were on to something... Perhaps, like Goldman, Fidelity knows that "unless things change, there's going to be a massive crash - a flash crash times ten..."

 

And that would not be good for Fidelity's AUM...