New York City-based Tradeworx Inc. has signed contracts to implement its investment decision-support tools at Goldenberg Hehmeyer & Co.-a proprietary fixed-income trading firm-and A.B. Watley Group-an online brokerage firm.
Goldenberg, a floor member of the Chicago Board of Trade, expects to roll out a pair of Tradeworx' front-end applications by October. A.B. Watley, which provides brokerage services to active retail clients, plans to integrate Tradeworx' flagship Limit Order Tool (LOT) with its order-entry and execution system in the near future.
Rashi Narang, president of Tradeworx, describes LOT as a decision-support tool targeted at both professional traders and retail investors who trade limit orders-orders to buy or sell a security at a customer-specified price. After a user enters a ticker, price and share size into LOT, the tool calculates the odds of the user's limit order getting filled, and explains, in detail, how the user can save commissions by entering a limit order instead of a market order.
Besides rolling out LOT, Chicago-based Goldenberg is also installing Tradeworx' fair price tool (FPT) in support of its traders. Narang explains that Goldenberg's traders often trade illiquid financial instruments that present real-time price discovery problems. But those problems should occur much less frequently after the rollout of FPT-an analytics application that "enables price discovery to occur in illiquid or infrequently priced markets," says Narang.
The deployment of LOT, meanwhile, should help the firm's traders execute more limit orders at cheaper costs. Narang says the application is a good fit at Goldenberg because futures traders enter a lot of limit orders. Both FPT and LOT, says Narang, should be rolled out on the desktops of Goldenberg's proprietary traders by October.
In addition to installing FPT and LOT, Tradeworx is also developing a customized, automated trading system for Goldenberg. Narang says the system, which would provide arbitrage opportunities for the firm's traders through FPT, is scheduled to go live in December. The system is intended to provide Goldenberg's traders with the power to make faster and more efficient decisions.
While Goldenberg has commissioned Tradeworx to build a customized trading system, A.B. Watley is now in the process of integrating LOT with its internal order-routing and execution system. Once the integrated system is completed, says Narang, it will provide benefits for A.B Watley clients who electronically enter their limit orders via the firm's Web site.
After entering an order, clients will get back an order confirmation page that informs them about the odds that order will get executed. If they are displeased with those odds, clients will then be given the opportunity to change them.
Through a calculator users can pull up on their screen, explains Narang, they will be able to enter the odds they'd like to see for their limit order getting executed. After they enter their desired odds, share size and time frame, the system will calculate the price they need to get the fill they want.
A.B. Watley should complete the integration of LOT and its internal system within a couple of months. Currently, LOT can be accessed free of charge via a couple of different Web sites, including A.B. Watley's.
For a small monthly fee, however, users can also tap into an industrial strength version of LOT that is equipped with more analytical power. Included in that package is charting capability that graphically shows the odds of getting a limit order executed within six different time spans: five minutes, 10 minutes, one hour, two hours, end of day and end of week. Moreover, that version also gives users the ability to adjust the odds of getting limit orders filled. For example, if users ask the system to boost thier odds of getting filled to 80% by the end of the day, it will calculate a price at which they can achieve that.