THETRADETECH DAILY
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BOOK-BUILDING : A new frontier for automation
Dr Robert Barnes , group head of securities trading and CEO of Turquoise Global Holdings , London Stock Exchange Group and Mark Badyra , founder and CEO , Appital , explain to the TRADETech Daily how their collaboration on automating the bookbuilding process will benefit buy-side participants along the entire transaction chain .
Mark , as the founder , could you tell us a little about the genesis of the Appital bookbuilding platform ? Before starting Appital in 2018 , I worked at a couple of banks where I was exposed to the various bookbuilding processes . I think everyone in the market would agree they ' re incredibly inefficient for both sell-side and buy-side .
Our aim was to create a platform to alleviate the inefficiencies within the bookbuilding and deal distribution process , which is still highly manual and opaque today . We decided to focus on secondary liquidity , so buy-sideto-buy-side flow , and this is really what the Appital platform now facilitates .
Over the past couple of decades , a great deal has been achieved in reducing manual intervention in the trading process . What was it that you felt the industry hadn ' t yet got to grips with ? If you ' ve got 0.1 days of average daily volume ( ADV ) in any publicly listed equity at the moment , you can go to an exchange , traditional lit or dark pools , and find liquidity for that . What I saw was that everything above one or two days ADV , which is a significantly larger order size , is still not electronic . If you have a position of two days ADV on your pad , for example , until Appital launches , your only option is to pass that deal onto your broker and allow them to call around the market on your behalf , building up the demand manually and then executing that position . We ' re continuing that trend of electronification , but beyond where it currently ends , which is about one day of ADV .
What feedback have you received so far ? Our first year was spent developing a very intuitive user interface for buy-side traders to originate their bookbuild , target and distribute it all from the platform . When we launched the beta process , the feedback from our launch to asset managers was that it needs to sit within their execution management system ( EMS ), which is really the mission control user interface through which they see all incoming and outbound flow . Secondly , the question was how it executes .
Over the past 18 months , we ’ ve worked with a number of EMS providers to integrate Appital into their interface , and also worked with Turquoise , which is essentially the market infrastructure that we pass the deal over to through a FIX-based API , so it seamlessly executes in a way that is recognised by all users .
How did the relationship with Turquoise come about ? Who approached who ? We reached out to LSEG in August 2020 . Our first call with Dr . Robert Barnes and the team at Turquoise was probably one of the most successful calls we ' ve had . The immediate feedback we received from the team was that this is really something they ' re looking to do .
Robert , is that how you remember it ? It has been a privilege to engage with Appital
16 THETRADETECH DAILY