Risk Management

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Barclays Partners With Clients To Create Liquidity and Transfer Risk

With the new feature, a portion of the client’s order is automatically transferred to Barclays’ central risk management book.

Barclays has introduced an automated capital commitment feature, which allows clients to partner with the firm in creating liquidity and transferring risk.

The new functionality, called capital commitment, is available through select equity algorithmic trading strategies for U.S clients.

“The capital commitment feature is the first of its kind in the industry,” Joe Corcoran, head of equities, said in a statement. “We are delivering the benefits of both high-touch and low-touch trading to our clients in a unique way that protects their anonymity, provides them with liquidity and reduces their total execution costs. Offering capital commitment on our algorithmic strategies will help to drive workflow efficiencies for our clients and strengthen Barclays’ position as a center of liquidity.” Clients must be entitled by Barclays before they can use the capital commitment feature. Once set up, they can select the feature on a per-order basis through a simple check box on their algorithmic order screen. Barclays determines the level of facilitation in advance with each client based on liquidity needs, and may revise it based on quantitative evaluation. With the capital commitment feature enabled, a portion of the client’s order is automatically transferred to Barclays’ central risk management book, thereby providing the client with instant liquidity as well as saving them the execution cost associated with that portion. “Our early adopter clients have seen significant improvement in the average execution price of their algorithmic orders with capital commitment versus without,” said Bill White, head of equities electronic trading. “We are simplifying clients’ work flow, liquidity capture and execution risk management, all at the push of a button.” The launch of the automated capital commitment feature is the latest among recent initiatives from Barclays aimed at making liquidity capture more efficient for clients, the bank noted.

In October 2012, Barclays began reporting its electronic trade volumes for U.S. equities on the Bloomberg Professional service to give clients more transparency into the firm's liquidity. At the end of 2012, Barclays launched DirectEx, a registered ATS for actionable IOIs (indications of interest), built to help clients find and execute block trades. Barclays mainly distributes its actionable IOIs through the Bloomberg IOI network. Barclays plans to roll out the automated capital commitment feature next in EMEA as part of the ongoing development of its global electronic trading platform.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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