Liquidnet’s $105 Billion Buy-Side Liquidity Execution Gap

By Sophie Lindqvist

Nearly $110 billion in natural buy-side liquidity sits within Liquidnet’s network, while executed flow reaches only $5 billion to $6 billion. The difference is about $104 billion to $105 billion, which Global COO of Equities David Wachs calls Liquidnet’s “$105 billion problem.”

The figures anchor Wachs’s conversation with TabbFORUM CEO Bruce Morris at the STA Annual Market Structure Conference in Washington, D.C. The discussion covers fragmented liquidity, information leakage, the possible rescission of SEC Rule 611 and the growing role of nonbank liquidity providers.

How large is the execution gap?

On a simple subtraction, the unexecuted amount is about $104 billion to $105 billion. The same arithmetic puts executed flow at roughly 5% of the natural liquidity Liquidnet identifies. Neither result is a separate market estimate; both derive from company-provided totals.

The source gives no measurement period, definition of “natural” liquidity, venue mix, inclusion criteria or calculation method for the $110 billion and $5 billion-to-$6 billion figures. Desks should treat the scale as Liquidnet’s company-reported estimate, not a complete measure of institutional liquidity.

What changes in the workflow?

Liquidnet recently launched SuperBlock Targeted Invitations. Wachs described the product as “a data-driven workflow designed to unlock institutional block liquidity while giving traders greater control and reducing information leakage.” As described, the workflow uses data to target institutional block liquidity for invitation, with control and leakage reduction stated as design objectives.

The source does not disclose:

• targeting criteria or data inputs;
• invitation format or counterparty-selection logic;
• fill measurement or fee structure.

Those omissions prevent a desk from judging how the workflow affects selection, information exposure or transaction cost. No post-launch performance results are provided, so the stated objectives cannot yet be treated as demonstrated execution savings.

Is Rule 611 rescission a mandate or a proposal?

The source identifies the potential rescission of SEC Rule 611 as part of the market-structure backdrop. It supplies no proposed rule text, proposal date, effective date or compliance deadline. The discussion therefore cannot be read as an operative regulatory change.

Any routing or compliance response based on rescission would need formal regulatory text and an implementation timetable before procedures changed. Rule 611’s treatment here is scenario context, not an operating instruction.

Where do nonbank liquidity providers fit?

Wachs cited a growing role for nonbank liquidity providers as fragmented liquidity and information leakage reshape how institutions access liquidity. The source names no individual providers and gives no volume, market-share or performance statistics for that group. The segment claim therefore remains a management view rather than a segmented market analysis.

For execution desks, the practical issue is the path from expressed institutional interest to completed block execution. SuperBlock provides a specific workflow in which to test how targeted invitations, provider access and trader control interact. The test must establish whether greater control reduces leakage, as Wachs said, and whether the process adds execution steps or technology dependencies.

What evidence would show that the gap is closing?

The conference material identifies a conversion problem: $5 billion to $6 billion of execution against nearly $110 billion of natural liquidity. A useful product review would measure how much additional natural liquidity SuperBlock converts into executions, on what terms and with what evidence of reduced leakage. The source reports no such results. The $105 billion headline remains a company characterization rather than a demonstrated outcome.

What is the Industry Guide’s role?

TabbFORUM presents the TabbFORUM Industry Guide, or TFIG, as an extension of its commitment to serving as what it calls the industry’s only neutral thought leadership platform. It also describes TabbFORUM as an open community for capital-markets professionals to share ideas and thought leadership with peers.

Firms can search for a company, claim and edit a listing, or add a missing one; the stated purpose is to help participants connect, discover companies and conduct business. This directory and community function remains separate from execution evidence, and TabbFORUM states that the authors’ views do not necessarily reflect its own.

The next checkpoint is measurable: whether targeted invitations convert more of the identified $104 billion to $105 billion gap into executions while preserving the stated reduction in information leakage.