Follow the Leader
Since it began offering its algorithms to clients three years ago, CSFB is widely acknowledged as a leader in the space, but other brokers are attempting to catch up. "Right now, you're in the middle of classic land-grab," says Rob Flatley, managing director of electronic trading services at Banc America Securities (BAS). "Everybody in our position wants to get as much forward desktop integration as we can, and also build out as much strategy capabilities," he adds. BAS currently distributes quantitative strategies through LongView Trading, Charles River and Bloomberg, but there's more to come, says Flatley.
BAS provides six core algorithms. In addition to volume weighted average price (VWAP), there are participation strategies with which a client can opt to trade its orders, as well as specific algorithms for small-cap illiquid stocks and others for mid-cap liquid stocks, Flatley explains. "You can tune them to be aggressive or passive, depending on what you are trying to achieve," he adds, noting that customization is infinite.
JPMorgan is also partnering with technology platforms to deliver quantitative models. It has a dedicated group that develops and implements algorithms and works with clients. "We're trying to make them accessible in any way possible," says Emily Portney, chief operating officer, JPMorgan's Equities Americas business.
The brokerage's Electronic Execution Services Group is providing access to algorithmic trading strategies via Charles River Development IMS and Linedata's LongView Trading. "It's all about accessibility. We want to do whatever the client wants," says Portney. "We're working with all the major vendors out there."
Portney says giving the buy side direct access to algorithms is a new trend that reflects the changing nature of the equities business. "With the decline in the traditional block-business and average trade-size, the buy side is looking for tools that reduce market impact and provide anonymity," she says.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio