In a letter sent to clients today, ITG informed its user base that sell-side algorithmic access to POSIT will be discontinued as of November 8, 2007.

Chris Heckman, managing director at ITG, stated in the letter that “extensive conversations with clients and analysis of recent trends in POSIT usage” led to the decision.

The letter also explained that the “proliferation of algorithmic tools designed to rapidly send small orders to various destinations is resulting in smaller orders being submitted to POSIT.”

It continued that Transaction Cost Analysis done by ITG determined that ATS’s dominated by small orders with shorter durations and smaller execution sizes are not performing well and the firm wanted to move in a different direction.

“We are confident that the adjustment to our constituency will improve our average trade size and the quality of execution in POSIT; and we have set a goal of reaching an average trade size of 10,000 shares in POSIT and 50,000 shares in BLOCKalert,” the letter concluded.

The discontinuation of sell-side algo access to POSIT was also addressed in the firm’s third quarter earnings call. Bob Gasser, CEO and president of ITG, said that, “third party dark aggregation has not been beneficial,” and basically as average execution size had dropped the decision became necessary.

“We are going back to the firm’s roots,” he said. “The real value clients derive from POSIT is the ability to trade blocks with one another.”

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