Nasdaq Inc said on Tuesday it will host a new private stock trading venue for PureStream Trading Technologies Inc, a startup that aims to help big institutional investors get their orders done faster, without impacting the market.
The new trading platform is expected to go live by the end of June, pending regulatory approval, and its algorithms will give priority to orders based on the amount of liquidity they offer, rather than time of arrival at the trading venue.
PureStream matches customer orders similarly to how Google organizes the internet, by relevance, not chronologically, Armando Diaz, chief executive officer of PureStream, said in an interview.
The market in general is calibrated towards retail-sized orders of 100 or 200 shares, which is not ideal for an institutional order of 200,000 shares, said Diaz, who was formerly global head of cash equities at Citigroup Inc.
“What PureStream does at a very high level is increases the bandwidth for institutions such that they can now match that 200,000 shares and transfer that liquidity amongst themselves,” he said.
PureStream closed a $14 million Series A fundraising round on Feb. 24, led by Nasdaq Ventures, Goldman Sachs, BMO Financial Group, Bank of America, AllianceBernstein, and MaC Venture Capital.
The company has signed up 15 major broker-dealer clients ahead of its trading platform’s launch, Diaz said.
PureStream said institutional orders sent to its alternative trading system (ATS), or dark pool, will be filled up to 40 times faster than on current trading platforms.
Dark pools are electronic trading venues that do not have to make information like trade sizes public prior to execution, originally with the aim of getting large orders done with minimal price movement.
Exchange operator Nasdaq unveiled its plan to host trading venues in 2016, outsourcing its technology and regulatory expertise. It now runs ATS for firms including Goldman Sachs Group Inc and Stifel Financial Corp.