UBS Group AG (SIX:UBSG) is planning to close Crossfinder, the alternative-trading system, and cease operations with AES (NYSE:AES), the affiliated algorithmic-trading business that it inherited from Credit Suisse. The businesses were once leaders in electronic trading and innovation, but Crossfinder’s last day of operation will be August 31, and AES will no longer route orders to it beyond that date. This decision comes as a part of UBS's ongoing efforts to shed assets acquired from the now-defunct Credit Suisse, following a government-brokered rescue deal worth 3 billion francs ($3.4 billion).
Credit Suisse's Crossfinder was once among the largest alternative-trading systems, also known as dark pools. However, the volumes have dwindled, especially following the Archegos Capital Management fallout and the subsequent takeover by UBS. Volumes on Crossfinder ATS plunged by 70% in the four months through May. These dark pools allow buyers and sellers to remain anonymous, enabling them to trade without moving the market, and have been a preferred choice for certain investors.
The closure also highlights the challenges faced by Credit Suisse in the aftermath of approximately $5.5 billion in losses tied to Archegos. Despite years of investment in equities and electronic trading and having survived through market volatility such as the 2008 financial crisis and the Covid-19 pandemic onset, AES has lost its market prominence. Crossfinder, which started in 2005 and was the third largest as recently as June 2022, now holds only a 1.9% market share as of May.
Meanwhile, UBS continues to operate its own ATS, which had 15.7% of the market share in May, making it the largest dark pool with a lead over its top competitor, Goldman Sachs Group Inc (NYSE:GS).'s Sigma X2. The bank has stated that it will provide more details about the non-core unit that will house the businesses and assets it is planning to shed, marking the latest move in a string of sales and wind-downs by the Swiss bank.
This article was originally published on Quiver Quantitative