Aqua, a new alternative trading system that is trying to solve the block liquidity problem for the buy side and mid-tier brokers, has joined Tradeware Global Corp.’s FIXLink, global connectivity network.

“Tradeware has a platform that is used by a lot of brokers,” says Kevin Foley, president and CEO of Aqua, a new electronic trading platform for block liquidity that is backed by Cantor Fitzgerald and eSpeed. Aqua did its first trades in December. “People aren’t going to trade unless it’s seamless and paperless. You’ve got to integrate where the source is and where the liquidity is,” says Foley.

Tradeware will enable Aqua to access the liquidity of tier two and tier three brokers and large buy-side firms routing orders through the network.

According to Cody Callihan, EVP of Tradeware Global, the broker neutral network has had requests to establish the connection to the new liquidity source. Tradeware reaches a lot of the small and mid-tier brokers that are regional firms, as well as direct market access brokers (that offer pure execution without a research product) and minority owned broker dealers, explains Callihan.

“We’re keen to establish connectivity to value added sources of liquidity for our smaller and mid-tier broker dealers that are keen to connect to anyone that can give them any sort of an edge,” emphasizes Callihan. Acting as a large connectivity grid, Callihan says the network has over 1,000 institutions and over 320 broker dealers.

Aqua ATS is building a block of liquidity in U.S. equities for the mid-tier regional brokers, hedge funds and the largest buy side firms, says Foley. Unlike many of the electronic trading systems that focus on matching the buy-side with the liquidity of bulge-bracket firms, Aqua is developing a block trading system for one of those not well-served routes, says Foley. “The buy-side doesn’t have a problem accessing the liquidity from the bulge bracket firms,” says Foley “We give them a single point of access to block liquidity from 110 mid-tier brokers. They have research specialties in stocks that are hard to trade and they receive large institutional orders as payment for their research,” he explains

While the mid-tier brokers talk to the big buy-side firms, they don’t have direct hooks into all the buy-side firms, says. “There are hundreds of smaller sell-side firms that lack the resources to reach all of these buy-side firms themselves, says Foley. “We help plug the gap that in former times would be filled by working an order on the floor of the NYSE,” says Foley.

With Aqua joining the network, Tradeware currently connects to eight ATS/MTF (multilateral trading facility) that have joined its list of destinations. Not only does Tradeware have institutions coming into the grid, “It has ATSs and dark pools connecting into other points,” says Callihan. “Whether you’ve got broker-to-broker business or institution to ATS business, it can all be traversed through the FIXLink network,” notes Callihan.

Though Tradeware primarily serves broker dealers, it also acts as a network for quantitatively based buy-side institutions. “With regards to Aqua, we could have sell-side broker dealers delivering orders into Aqua and could have messaging back into the institutions,” says Callihan.

In connecting to each other, “We each add a piece to our respective puzzles,” says Foley. Aqua also has arrangements with other software vendors that have different client bases, notes Foley. Aqua has done integration work with the leading buy-side order management system vendors, so it can help the Tradeware clients connect into the liquidity of the big buy side firms, he adds.

“It’s critical for Aqua to attract a lot of buy side firms before it asks the brokers to do too much,” says Foley. While the brokers are doing some trades, “It’s not real trading until we have enough buy-side firms,” says Foley. The goal is to bring on 50 to 60 buy-side participants by February, which will make it a good experience, says Foley.

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