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UBS Unveils Algo Strategy For Illiquid Securities

The algorithm can direct traders to the best venues for hard-to-trade stocks and help them navigate unpredictable market conditions, the firm said.

UBS announced the launch of an algorithm it contends will help users trade illiquid securities by directing them to the best liquidity sources in unpredictable or low-volume market conditions.

The algorithmic strategy, dubbed UBS Swoop by the firm, is designed specifically for securities that are difficult to trade, the investment bank said. It's built to direct traders to the best venues for hard-to-trade stocks and is being launched globally, though it will be customized to fit the local market structure wherever it's used, the company added.

"The availability of equity liquidity is never a given, but for some securities it is even more elusive," Owain Self, UBS' global head of algorithmic trading said in a statement.

"Traditional algorithms were built to trade on a schedule, which means they are not suited to appropriately capture unanticipated bursts of liquidity.'"

In addition to illiquid stocks, the firm said UBS Swoop is also designed for the trade of small cap and low- ADV securities. It also has the discretion to trade when the appropriate opportunities present themselves, and carefully allocate child orders to markets and alternative trading venues it deems as the best liquidity sources for low volume securities, UBS said.

UBS noted that it previewed the strategy earlier this week at its Small & Mid Cap Symposium in Boston. As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio

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