Instinet (New York) unveiled Cobra, a stealth algorithm that, according to the company, removes portions of liquidity when available, leaving the stock's spread unchanged. Available through Instinet's Newport and Trading Portal front-end systems, Cobra uses a stock's historical quoting trends to determine the best execution points and places orders randomly, making the trade largely undetectable by the market, Instinet says.
The algorithm is designed to simulate standard trading strategy to minimize potential market swings. "There are [scenarios] where a trader essentially wants an algorithm to automate his normal trading behavior," said Mike Plunkett, president of Instinet, North America, in a release.
Cobra is among the next-generation algorithms "that will facilitate the growth trajectory of algorithmic trading by the buy side," added Gavin Little-Gill, research area director, TowerGroup, in the release.