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Inside Abel Noser's Trading Floor

Advanced Trading takes you on an exclusive tour of Abel Noser's New York trading floor, where the agency broker known for transaction cost analysis, is customizing algorithms for the buy side, while growing its fixed income trading and transitions business.

Abel/Noser is an independent agency broker providing execution services and transaction cost analysis to institutions. Since the mid 1980s, the firm has been a major player in the business of measuring trading costs for pension sponsors, endowments and foundations. The firm's New York trading desk executes trades in U.S. equities, international equities and fixed income, and operates a sizeable transition management business. Abel Noser offers algorithmic trading and pre- and-post- trade analytical tools. Leveraging its TCA data, the firm is customizing algorithms to help portfolio managers time their trades based on the consistency of their styles.

An independent agency brokerage firm headquartered in New York, Abel Noser focuses on U.S. and international equities as well as fixed income trading. In 2007, Abel Noser launched a fixed-income trading desk, which propelled the firm into the transition management space. Over the past five years, the firm built an algorithmic trading desk, which customizes a line of algorithms known as Signature Algorithms for specific manager clients.

Based in lower Manhattan, the firm's trading floor (right) seats seven equity traders -- including one global equities trader -- two program/algorithmic traders and two bond traders who execute fixed income trades and are part of the firm's transition business. The firm has eight on its sales team and seven in sales support who help get all the reports ready. Back-office and trading support staff sit on the desk, along with the firm's technologists who build its algorithms. The trade measurement business (left side of trading floor) is operated separately under the name Abel Noser Solutions, formerly known as Ancerno.

Custom Algos

CEO William Conlin (right) joined Abel Noser in 1986 when the firm opened its trading desk."We've been a well-kept secret in our ability to trade equities," he says, pointing to the firm's block trading skills. Two years ago, it added a global equities capability. Now the firm is using its TCA expertise to develop algos that Conlin says the big firms can't build because managers wouldn't provide them with all of their trading files. "We're building algos now that match the manager's timing," he explains.

Christopher Corwin (right), EVP of institutional trading, oversees all trading at the firm. Sitting in front of four screens, Corwin uses Bloomberg LaunchPad (far right screen) to monitor markets, including treasuries, equity sectors, indicators, futures, indexes and currencies. He has five pages set up in LaunchPad depending on what he wants to view.

To measure performance of trades, Corwin says he relies heavily on several internal measurement tools to track clients' trading and commission dollars as well as their commitment to certain products. He uses TradeEx, a proprietary tool that lets him target any benchmark the client prefers. For baskets of stocks, Corwin calls up Trade Zoom (far left screen, not shown), an internal tool from Abel Noser Solutions, to run pre-trade, real-time and post-trade analysis and to estimate the cost of execution.

Cliff Emmerich (right) is SVP Trading. He handles buy side accounts, and he sits to the left of Corwin.

Sean Roach, (right), VP Trading.

When a big program comes in with client orders, Corwin uses TradeZoom's pre-trade analysis, before he starts trading. He can also pull off trade data from an Excel spreadsheet from the firm's OMS and flow it into the pre-trade system. He gets an overview of how the basket of stocks looks in terms of positions and weightings – whether its dollar neutral or more weighted to the buys or sells – to keep the money in balance, he says. "This is looking down from 20,000 feet," says Corwin, who also hits different tabs to breakdown the program into buys vs. sells, market capitalization and sectors, such as financial vs. energy.

TradeZoom will also help traders identify the 10 largest most liquid and the 10 least liquid positions, and give a breakdown by average trading volume, notes Corwin. "The 10 least liquid positions are going to be high-touch orders and the 10 largest liquid positions are the ones that are going to impact the performance of trades the most," relates Corwin.

"We have our own canned algorithms, our own smart order router and then we build custom algos for our clients based on the trading data (they provide to Abel Noser Solutions)," explains Corwin. On his order entry screen, (second from left, not shown), Corwin has a drop down menu from Inforeach where he keeps all of his destinations and algorithms. This is only a partial list since the firm is migrating all of its destinations into Inforeach as its new order management system. "We have all the dark pools in there, including ECNs, ATSs and exchanges," says Corwin.

Chris Masi (right) is VP of Trading at Abel/Noser. Masi runs the international equities trading desk.

According to CEO Conlin, Abel Noser partnered with Inforeach to develop a proprietary OMS and is moving off of SunGard's GL Trade. The migration is slated to go live in September.

Dominick Ciano (right) develops Abel Noser's Signature algorithms, which are built for specific managers based on their style and trading patterns. He also built a proprietary OMS with Inforeach. Richard Altamirano is AVP - Technology (left)

Many Abel Noser traders currently have four screens, but when the new OMS is implemented, they will be replaced with two monitors, according to Conlin.

Michael Woods, Jr. (right), program trader for institutional trading, manages baskets (or lists) that come in electronically directly from the client via the firm's EMS or from the cash desk and determines which stocks are algorithm-eligible. About 3,000 stocks are algo-eligible, which represents about 99% of the volume that trades, says Woods. If a stock is too thin, then the order is sent back to the cash desk.

If the client chooses an implementation shortfall strategy, for example, Woods uses the in-house TCA system (far right monitor) to examine the characteristics of the portfolio in order to determine whether the order can be put through the algo. Using Bloomberg custom LaunchPad for news and charts (second screen from right), Woods examines intraday volume of stocks in different time buckets to see the path of the stock, for instance, checking the amount of volume that traded at 10 minute intervals against expected volume.

Brett Mcleod, (seated left of Woods), is VP Algorithmic Trading Services. He works with the Signature algos and can talk with portfolio managers about how to interpret the TCA. "We've taken a guy who knows TCA and put him on the trading desk," says Conlin.

Frank Santore (right), VP Fixed Income Trading, joined Abel Noser in 2007 from BNY Mellon and, previously, Merrill Lynch. Santore monitors the treasury market yield curve with Bloomberg LaunchPad (far right monitor, not shown). He trades treasuries, agencies, corporate bonds and municipals. "When the world is falling apart, people call this desk when they are running away from stocks," says Santore. The firm is also in the transitions business. In 2007 when managers were getting fired because of poor performance — because they got caught with mortgages in their books – Abel/Noser helped them shift their portfolios to new managers, says Santore.

Santore trades government bonds via Bloomberg (center screen) and corporate bonds via MarketAxess. But Sanotore says he prefers to buy bonds by calling up the client. "We are old school," he says. "I can give you more of what's going on as a human being than sending a message via the machine."

Jim Geronimos, VP Trading Support, sits on the desk.

Carol de Gannes, Trading Support.

Founders Gene Noser and Stan Abel (l. to r., at right), come to work every day (except Fridays). They launched the transaction cost analysis business in 1984 after conducting a study for the U.S. Department of Labor about trading costs for pension plans. Abel Noser had the ability to crunch the data. "We were told that trading costs couldn't be measured," recalls Abel, who shares an office with Noser.

Abel discusses the current market structure. He cited concerns about exchanges selling trade and quote information first to high frequency trading firms."You can get a fraction of a nanosecond by moving your equipment into the same building," notes Abel.

While known for its TCA, Abel Noser is competing with its execution results, asserts Conlin. As an agency broker, "We're not committing capital, we're not shooting against their orders,” says Corwin. “There's no conflict of interest with all the client orders here. We trade them like they're our own orders, our own money," says Corwin. "I watch the trading here. Stan Abel and Gene Noser are monitoring all the trading as well. There's lots of eyes looking at this," adds Corwin.

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

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