Finding and tapping liquidity is obviously a vital issue affecting traders across the board and at the Security Traders Association's (STA) 74th Annual Conference in Boca Raton, Florida, it was the focus of a key panel discussion.

Moderated by Lisa Utasi, director and senior equity trader at ClearBridge Advisors and this year’s STA chairman, the panel covered aggregation and consolidation among dark pools as well as the future of dark liquidity.

As more and more dark pools pop up in the marketplace and talk of aggregation and consolidation continues, Chris Heckman, managing director at ITG, pointed out that traders are now starting to understand the nuances and differences between the pools, which will drive consolidation going forward.

“Over time it will create differences in the value proposition,” said Heckman. “Traders will be able to see this through TCA and more usage the differences in quality and quantity and even size of executions in different venues which will ultimately create some pricing power.”

George Hessler, executive vice president at Lime Brokerage, added that the market would likely see more bi-lateral agreements put in place between dark pools. But when it comes to bringing liquidity together effectively, he said, “The big winner so far though in terms of aggregation is the algorithms.”

Ironically, the panel agreed that the future for dark pools is bright. Alfred Eskandar, director of corporate strategy at Liquidnet, foresees more “co-opetition” between dark pools, more reciprocal liquidity agreements among the dark pool providers.

“Dark pools are a good thing for the entire market,” said Eskandar, adding that more linkages will also help determine which dark pools will ultimately succeed and which fall by the way side.

Hessler concurred; saying that dark is good and added that dark liquidity is a great way to “pick up speed in the marketplace.” Trading in dark pools offers a chance to increase speed and compete against more model and all-electronic trading strategies.

New asset classes are where David Mortimer, CEO of 3D Markets, said the future of dark pools is going. His company is readying to launch an options dark pool, Archangel.

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