Algo Trading Gets Tech Upgrades
Algorithmic trading firms are seeking to broaden their reach across asset classes and geographies without making capital investments in servers and software.
The technological hurdles associated with successfully developing and deploying trading strategies are steep enough without having to finance Big Iron.
“While there is demand for automated trading solutions, we believe there is great demand for solutions that increase opportunities without adding great cost and complexity,” said Timo Pentner, managing director, Americas, at RTS Realtime Systems Group, a trading technology provider. “We want to make automated trading accessible for a larger group of users and traders through global partnerships with brokerage firms.”
RTS Realtime Systems Group has launched a fixed-price package of customized algorithmic and automated trading tools.
Called Tango OnDemand, the package enables single users and firms to pay a monthly price for their choice of platform, two hosted exchanges on a global trading network and an array of built-in trading strategies.
“It enables clients to access through our hosted environment the entire algo suite of RTS— RTD Tango, RTD Tango Trader or RTD Tango QUANT—without investing in hardware, significant monthly charges, overhead or upfront costs,” said Pentner. “This is a software service on demand, and all the trader needs is an existing relationship with a brokerage firm.”
Algorithmic traders are also incorporating predictive analytics for trading equities.
Through collaboration with FlexTrade, NYSE Technologies, the technology arm of NYSE Euronext, is providing access to FlexEdge, a FlexTrade service that supplies intra-day volume forecasts for 3,000 equities and exchange-traded funds.
These volume forecasts represent a substantial improvement over traditional volume estimation techniques and can help clients manage slippage costs, improve order sizing and reduce volume-weighted average price tracking error.
“Customers will also have accurate and up-to-date predictions of the volume yet to trade within the remainder of the day,” said W. Todd Watkins, an executive in the global market data department at NYSE Technologies.
This information can be of critical importance to traders who receives a block order 10 minutes before the close in a stock that they have not traded before.
“FlexEdge gives an immediate and accurate prediction of the volume that will trade in that stock in the final 10 minutes, allowing the trader to time executions to take advantage of end-of-day price movements,” Watkins said.
Tango OnDemand provides access to RTD Tango, the firm’s algorithmic trading platform; RTD Tango Trader, a combined click and algorithmic trading system; or RTD Tango Quant, a suite of technical analysis, charting, back-testing and optimization tools.
The package includes built-in algorithmic trading strategies such as arbitrage, smart order routing, VWAP1, TWAP2, data analysis, market making, hedging and baskets.
Clients can use these strategies, modify them or build their own, according to their specific needs or interests.
“We understand that in this environment, firms want a sense of comfort about the trades going through their systems,” said Pentner at RTS.
RTS has long specialized in pre-trade risk controls, he said, and has migrated from server limits to more latency-sensitive gateway limits that are meeting and exceeding the requirements for algo trading.
“We provide sophisticated limit checks that prevent erroneous trades from going into the market,” Pentner said. “We also have sophisticated back-testing and simulation capabilities that enable traders to test strategies before they go into the market.”
Are trades executed in line with the intent of the orders?
Cowen estimates at least 6 basis points saved per block trade, more for less liquid securities.
eFinancialCareers reports that low-vol markets favor man over machine.
Offering scrapes public quotes to create firm prices.
The firm has slated three more block trading solutions for MiFID II.