SunGard (booth #2411) unveiled at the SIFMA show a dark aggregation service that consists of smart order routing logic that will let buy- and sell-side firms test the waters of a handful of dark pools with which SunGard has partnered to find the best venues for direct market access orders (as opposed to block trades). The company also is rolling out a set of algorithms that can be customized with the help of quantitative analysts on SunGard's staff.
These new offerings fall under the umbrella of SunGard Liquidity Services, a suite of services intended to help customers make informed trade execution decisions and reduce their trading costs. The suite of services already includes Sponsored Access, smart order routing logic that aims to find the best routes to displayed markets. Sponsored Access was introduced right after Reg NMS was implemented, and the offering is embedded in SunGard's BRASS trade and order management suite, which is used by market makers, institutional brokers and traders.
The new dark aggregation service uses routing logic to let customers sweep dark pools before routing orders to the displayed markets. "We do a parallel sweep — once we get an order, we look at predefined settings to determine how to access the dark markets, and then simultaneously spray out orders to several dark markets looking for liquidity," explains Ralston Roberts, senior vice president of product strategy, SunGard BRASS. "Once we find liquidity, we continue to access liquidity to the dark markets until we have exhausted all available sources."
The service then routes bids and offers to the displayed markets. "We're finding that by doing that, [customers] are able to see price improvements on those orders and lower the overall cost of trading," Roberts says.
The new algorithms are provided as a service delivered via a fixed interface to the smart order router, according to Roberts. One interesting feature of the algorithms, he notes, is a micro-trading component that will use historical and real-time information to reduce the footprint that is usually made by placing orders into the marketplace, helping customers find the right order size and timing to minimize the impact on price movements.