‘Dark Pool’ Trading Platforms LeveL ATS and Luminex Set to Merge

(Bloomberg) -- Off-exchange trading venues LeveL ATS and Luminex Trading & Analytics agreed to merge in a deal that brings together their buy-side and sell-side investor networks.

LeveL ATS, an equity-trading platform for sell-side investors, and Luminex, a block-trading venue built and owned by the buy-side community, will continue to operate as separate trading systems but under one broker-dealer system, according to executives for the two Boston-based companies. 

“By combining we create an ecosystem where both the buy-side and sell-side have the ability to interact when and how they choose, broadening the liquidity that both customers can participate in,” LeveL ATS Chief Executive Officer Whit Conary said in an interview. 

The merger, which is subject to regulatory approval, will establish closer ties between the off-exchange trading venues, also known as “dark pools.” Both businesses function in an opaque corner of the market where stocks change hands with little transparency. Unlike exchanges, dark pools aren’t required to regularly disclose information about their trading systems.

Most dark pools are run by broker-dealers, firms overseen by the Financial Industry Regulatory Authority that buy and sell assets on behalf of customers as well as trade for their own accounts. Participating shareholders in the merger of LeveL ATS, launched in 2006, and Luminex, which began trading in 2015, include banks and institutional investors such as Bank of America Corp., Fidelity Investments and JPMorgan Chase & Co.’s asset-management unit. 

The combined platform will “provide ways for the buy-side and sell-side community to interact” in a way that’s “more efficient,” said Pankil Patel, chairman of LeveL ATS and head of Americas electronic trading at Bank of America. “Now that the dots are connected, you can start to think of new product offerings and adoption of other asset classes” for further innovation. 

Nasdaq Inc. also is backing the deal both as a shareholder and by providing use of its exchange network, said Tal Cohen, executive vice president and head of North American markets at New York-based Nasdaq. “We’re positioned to help the companies go global alongside other investors, expanding both geographic and asset classes,” he said.

Other participating shareholders in the deal include Citigroup Inc., Bank of New York Mellon Corp., BlackRock Inc., Invesco Ltd., State Street Corp. and T. Rowe Price Group Inc. 

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