Top 100 Players in US Listed Market Structure

“Learn how to see. Realize that everything connects to everything else.” – Leonardo DaVinci

How do listed markets actually work?

And, how do players discover and capture opportunity from within that market structure?

And, what impact – if any – does the proximity of certain players to the centers of market liquidity have to do with the capacity of opportunity that is left over for all others that operate downstream from these players?

These are the kinds of questions that we ask ourselves all the time because if you were to adopt the perspective that markets – and the fortunes of market actors – are interconnected, then what happens in close proximity to liquidity is likely going to have an impact on those who operate farther afield from that liquidity. Layer on top of this the notion that all modern market ecosystems are in a constant state of evolution – whether by virtue of new products, new players, and/or new technologies and methods – and the puzzle-solving exercise for how to consistently discover and capture opportunity – often short-handed simply to alpha – becomes at least an order of magnitude more challenging than that within a static ecosystem.

So, if you’ve been following along with our writings for the past several months, then you already know that what we’re hinting at here is a segment of the market ecosystem that we’ve been calling the structural alpha zone; a segment of Alphacution’s asset management ecosystem map that mainly includes market makers and others representing the most active strategies among the entire spectrum of available strategies:

On top of that, Alphacution’s working hypothesis for the market ecosystem is that the capacity of alpha is finite (and elastic). An emerging corollary to this overarching hypothesis is that the structural alpha zone represents the portion of finite alpha that is primarily transactional; fed by spreads and the highest-turnover forms of statistical arbitrage. (By the way, it is in this sense that the growing complexity of liquidity fragmentation and the proliferation of structured or pooled products, like ETFs, benefit leading quantitative market making platforms, given their comfort in managing extreme complexity.)

So, with all that said, what we are trying to establish here as a next step in building the case for these hypotheses is try to set up a “short list” of key players who operate within the structural alpha zone, and then use Alphacution’s growing data and model library assets to support (or alter) the hypotheses. The idea is that if we can draw some clear lines around the key players in this zone, we may then be able to draw some clearer lines around the key players in the other zones; the active and passive management zones.

Now, of course, this is the kind of analysis where if you blink or turn your back on the topic for a minute or two, the landscape is likely to shift again – and the list of “top players” is likely to change. For instance, just in the past several weeks, and to the dismay of many students of the game, a 14th US equities exchange – Members Exchange (MEMX), backed by a consortium of large brokers and market makers – has been launched. This is our way of providing a disclaimer up front that this is a fluid situation, so don’t get too bent out of shape if your favorite player is not included in this version. (Just send a quick note with your thoughts to

Anyway, here we go:

In the illustration below, Alphacution starts the tally with a focus on the 13 US equities exchanges:

Next, we add 15 “dark pools” represented mainly by bulge-bracket investment banks, below:

When we add the other dark liquidity venues represented by independent (10), consortium (3) and non-bank market making (4) sponsors, the list of US equity liquidity venues expands to 45, see below:

Now, since our ongoing modeling efforts have highlighted leading firms trading simultaneously across asset and product classes – such as, in the cash and listed derivatives markets – the next illustration adds 15 US options exchanges and another 12 US futures exchanges to our schematic thereby expanding the US listed liquidity venue count to 72, see below. (Note: A more comprehensive inventory of liquidity venues, trading platforms and key players would include expanded focus on fixed income, currency and commodity (FICC) asset classes, as well as swap and other OTC derivative platforms. We’ll get to that down the road…)

Lastly, we finally arrive at the version of our schematic that showcases the Tier 1, bulge bracket broker-dealers (10) and our first pass at the Tier 1, non-bank market makers and proprietary trading firms (~23). Of course, if you have been tracking along with fingers and toes, then you have already noticed that our list includes 105 names. It is because of the ample room for discretion and debate over which buyside market makers and prop shops fall into the so-called “Tier 1” category that we are giving ourselves a pass on hitting the exact 100 mark for the time being.

In subsequent versions, we will provide a more objective, data-driven rationale for the ranking of this group of players. For now, the illustration below – along with the hint that there is a peripheral group of secondary and emerging players – represents the group that dominates the action in the structural alpha zone of US listed markets – and the list from which Alphacution will focus much of its upcoming modeling:

Of course, some of our modeling has already touched upon a subset of the buyside market makers and prop shops shown above. This broader list simply foreshadows some of Alphacution’s upcoming research, which we are very eager to get to.

Thanks for your attention.

Stay tuned for more, soon…

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By | 2019-04-03T20:57:45-04:00 February 28th, 2019|Alphacution Feed|

About the Author:

Paul Rowady is the Director of Research for Alphacution Research Conservatory, a research and strategic advisory platform uniquely focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. He is a 30-year veteran of the proprietary, quantitative and derivatives trading arenas. Contact:; Follow: @alphacution.