Liquidnet hopes to buck trend with IPO

By Phil Wahba

NEW YORK, July 4 (Reuters) - Liquidnet Holdings Inc hopes its position in the equities trading world will inure its initial public offering from the down drafts investors have shown new offerings.

Liquidnet, a nine-year-old, New York-based venue that institutional investors use to trade tens of thousands of shares at a time, filed its application for an IPO to raise an expected $500 million. It expected to bring the IPO to market during the fourth quarter.

The filing came amid the worst slowdown in the IPO market in five years, with the second quarter seeing only 14 offerings in the United States.

One threat to the IPO's success could come from the weak stock performance of the major exchanges.

NYSE Euronext (NYX.N: Quote, Profile, Research), Nasdaq OMX Group (NDAQ.O: Quote, Profile, Research), and CME Group CME.N, have seen their shares drop about 40 percent so far in 2008 on worries about their falling market shares and shrinking margins.

Compounding the exchanges' woes has been the proliferation of "dark pools," off-exchange venues where trades are executed anonymously created by large broker dealers such as Goldman Sachs & Co (GS.N: Quote, Profile, Research) and Morgan Stanley (MS.N: Quote, Profile, Research), and companies such as Liquidnet.

Liquidnet, an electronic and relatively unregulated trading venue, is also a "dark pool" and hoped that association would help it avoid being lumped in with the exchanges' swooning shares, said one analyst.

"Every institutional trader loves Liquidnet, so they will analyze it in detail," said Brad Hintz, an analyst with Sanford C. Bernstein.