Agency broker Bloomberg Tradebook has teamed up with financial technology company UAT to offer a software platform and adjustable algorithm called Boomerang intended to deliver commission savings to asset owners and improve trader productivity for money managers.
“This offering comes at a time when no one in the industry can afford to leave money on the table,” comments Ray Tierney, president and CEO of Bloomberg Tradebook, in today’s release. Tierney adds, This program represents a win for everyone involved — asset owners, money managers and ultimately, fund shareholders and plan beneficiaries of these investment portfolios.
“By addressing the long-unresolved issues around automating the execution of low-touch orders, Boomerang fills a need in the market that has been unaddressed for years," comments Laurie Berke, principal at Tabb Group, in the same release.
In addition to boosting trader productivity, Boomerang enables institutional traders to handle the commission recapture business which is part of the multi-trillion dollar sub-advised and externally managed industry, notes the release. Asset owners - pension plans, insurance funds and mutual funds — may outsource the management of their investment portfolios to outside money managers to take their expertise, performance, risk profile or brand name, notes the release. But they also have the right to recoup part of the brokerage commissions incurred by the fund’s money managers to reduce trading costs for their ultimate share owners.
Commenting on the development, Laurie Berke, principal at Tabb Group, “By addressing the long-unresolved issues around automating the execution of low-touch orders, Boomerang fills a need in the market that has been unaddressed for years.”
The Boomerang algorithm will become a central component of Bloomberg Tradebook’s commision recapture solution, according to the company. Boomerang enables traders at money management firms to adjust the algorithmic setting to define low-touch orders from high-value or high-touch orders. Orders that are identified as low-touch are automatically executed without further involvement from traders, saving the trader time to focus on the more complex, negotiated trades. According to the release, asset managers can incorporate the Boomerang algorithm into existing commission recapture programs or deploy it as the sole commission savings solution.
Tom Warren, UAT’s president explained that Boomerang is a productivity tool that saves time for money manager traders, allowing them to automate execution of low-touch orders in favor of focusing on high-value trading situations.”
In an earlier interview about UAT’s previous iPerX patented technology, Warren explained that his focus was on bringing efficiencies to the institutional sub-advised asset market, which according to today's release, had $1.85 trillion in variable annuities and mutual funds as of September 2011, citing Financial Research Corp. “The traders tell us they’re gummed up with their smaller orders. We realized that these traders were being pulled in a number of directions with competing interests, “ related Warren. “We literally built the iPerX algo with the idea of automating a portion of that decision making process,” said Warren. “It segregates order flow between high touch and low-touch traders, “ he continued. “This required manual servicing by the trader or in the back office with the step-outs after the trades were executed,” he said. According to a spokesperson for UAT, Boomerang is a much more comprehensive product offering that does include UAT’s original iPerX patented technology enhanced with support and service from Bloomberg Tradebook and their expertise and execution quality.
Bloomberg Tradebook launched its own commission management offering last summer, as reported in Advanced Trading.
[For more on Bloomberg TradeBook and its commission management platform, check out Advanced Trading's trading floor galleries.]