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Jump Trading to set up dark pool trading team in London, source says

First Published 13th May 2013

Jump Trading wants to take advantage of opportunities for equities dark pool trading, a source tells Automated Trader

London - Jump Trading, one of the world's largest proprietary trading firms, is assembling a trading team in London to take advantage of dark pool trading opportunities in the equities space, according to a person familiar with the matter.

The firm is seeking to connect to a number of dark pools in a bid to arbitrage between different venues by measuring latency differences, which allows traders to predict future price moves on comparatively slower venues.

"This is a really interesting move and other shops could follow suit soon," said this person.

The company did not respond to a request for comment.

Jump Trading normally arbitrages between regulated exchanges the same way, but as trading has increasingly migrated away from exchanges to dark pools, the company is seeking to keep abreast of the competition by following liquidity to less transparent venues.

Trading on exchanges has become more difficult for high-speed trading firms as large banks have sought to internalise flows and minimise information leakage about their orders, to stave off specialised trading firms that thrive on information about other customers' trading intentions.

Dark pool trading now accounts for more than 7% of European equities trading, according to data from Rosenblatt Securities, with several bulge-bracket banks and brokers offering their own dark pools to their customers. Dark pool trading is popular with corporate clients and some asset managers who are keen to avoid trading on the same venues as high-speed traders.

Jump Trading is a privately funded company, with offices in Chicago, London and Singapore. The firm trades across all major asset classes in the Americas, Europe and Asia, according to its website, where the company says that taking advantage of the latest technologies is one of the main drivers of success for the firm.