Thursday, May 30, 2013

Algos: "Next generation trading tools take shape"

From DJ's eFinancial News:
Brokers and software vendors are under renewed pressure to further develop electronic trading tools, as buyside investors demand more sophisticated technology to help them squeeze the last drop of profit from every single trade.

Two recent reports from capital markets consultancies Tabb Group and Greenwich Associates highlight the critical importance of sophisticated trading desk technology and the tools demanded by institutional investors in their quest for optimal trade performance.

The Tabb Group study released yesterday looks at the evolution of algorithmic trading for equities. Having previously been touted as a way to automate “simpler” orders, thereby allowing traders to focus on trickier trades, buyside firms now expect strategies to incorporate quantitative analytics to understand the most appropriate strategies for a given order. 

Tabb found that long-only buyside houses use an average of 50 algorithmic strategies from between eight and 12 providers.

Miranda Mizen, principal and director of equities research at Tabb and author of the report, said in a statement: “In the low-touch environment, the arms race is shifting to the intelligence built into algorithms and algorithmic strategies to give buyside traders an optimal choice of tools and strategies and clear visibility of liquidity across the marketplace.”....MORE