Institutions Find Themselves the Belles of the Ball

— Riley McDermid (January 14, 2010)
All sorts of market participants are leaping into the fray over how best to capture the plum prize of institutional investors in 2010--and some are even creating unique partnerships to do so, in the hopes that any endowments, foundations and pension funds shopping around are interested in programs eager to tailor parameters to their specific needs.

Those partnerships added a new chapter this week, showing just how urgent this "love connection" is becoming, as volatility shimmies and the market roars into the new year.

The news Wednesday that proprietary trading system Liquidnet would partner with alternative research firm OTR Global is just one more step in that direction, as dark pools, exchanges and all sorts of alternative trading systems try to tempt large investors--and the money that comes with them--into new and experimental channels right as they are reconfiguring their investment strategy.

"Institutional market participants are constantly challenged to make the best decisions across research and trading in order to capture alpha," John Adam, head of Liquidnet Insight, the research and services platform of Liquidnet, told Markets Media.

"Performance is extremely important and the right decision at the right time makes the difference between a winning position and a losing one," he said.

Adam said the partnership with the well-known OTR, which generates proprietary market intelligence for institutional investors, told Markets Media the match-up was a smart fit from the beginning.

"The partnership with OTR is strategic to the growth of Liquidnet's Management Access business. Liquidnet established itself in this area very quickly after launching it in June 2009 and have build a significant community of Issuers since then," said Adam. Since it has different and unique needs, it was crucial Liquidnet find the right partner to capture a significant part of this market.

"OTR provides content that is timely, unique, and relevant to our member community and enables us to better focus our Management Access efforts around the themes that matter most to investors at any given time."

Adam said Liquidnet had been particularly impressed by and earlier collaboration with the firm that will now make it much easier for the trading system to "create communities" for the institutional investor first around block trading, research access to issuers.

Launched in 2001, Liquidnet extends to 30 equity markets across five continents, with headquarters in New York and offices in Boston, London, San Francisco, Chicago, Toronto, Tokyo, Hong Kong, Sydney and Singapore.