According BMLL Technologies data, bilateral trading accounted for 35% of overall notional traded as of November 2024, including request for quote (RFQ), off-book on-exchange, over the counter (OTC) and SI volumes both above and below the large in scale (LiS) threshold. This marks a 12% increase since January 2021.

Defining what falls into the bilateral sphere is important. Regulators in the last few months have been attempting to clean up reporting flags in a bid to offer greater transparency to participants looking to better understand the landscape.

One of the most notable bilateral growth stories, however, is that of the off-book on-exchange segment. This umbrella term again accounts for a whole host of things including retail flow and high touch agency crosses. Cboe and Aquis’ new VWAP offerings will also print their flow as off-book on-exchange for example.

Central to the growth of the off-book segment and perhaps responsible for ruffling the most feathers is a relatively new workflow whereby non-bank liquidity providers quote directly to the buy-side via their execution management systems (EMS) leveraging actionable indications of interest (IOIs). It’s this new growth among other areas that has attracted notable attention from the industry and sparked new offerings from the more traditional players looking to preserve their market share.

The benefits of streamlined buy-side workflows are clear: offering better price improvement, reduced market impact and time to market and greater flexibility around liquidity access. What’s more, with volumes on the lit market continuing to decline, one can hardly blame traders for exploring alternatives to traditional workflows.

That being said, the bilateral segment is becoming increasingly meaningful with both alternative and now traditional players exploring new workflows, and some participants are now beginning to question whether such a level of bilateral trading exists that could be detrimental to the market’s long term health. Some participants have even begun suggesting that the European equities market could find itself on track to adopting an almost completely off-exchange foreign exchange model in the next few years if it continues on its current path. However, this eventuality is highly unlikely. Said bilateral workflows rely heavily on a reference price from the lit markets. Ironically, the thing that stands to be damaged if too many volumes move off-exchange.

For buy-side traders, the appeal of executing without going out to market is – understandably – hard to resist, but the question as to whose job it is to now moderate the level of bilateral liquidity in the market is now somewhat continuously being asked.

“I can understand the appeal to a buy-side trader thinking ‘I can clear my entire blotter with one click of a button so why don’t I do that and not have to worry about direct market impact?’,” explains T. Rowe Price’s equity trader and market structure analyst, Evan Canwell.

“There’s definitely a place for bilateral liquidity, but it’s incumbent on us as the buy-side to understand what we’re interacting with and think about the balance. It’s like fast food, it might feel good in the short term but there could be unintended consequences for the longer term health of the trading ecosystem.”

Non-bank providers

One of the most spoken about names in this context is, of course, Optiver. While the firm is not solely responsible for the growth of off-book on-exchange, the market maker’s model of connecting directly to the buy-side via EMS has taken the market by a storm. The firm’s model is risk filling but without acting as a systematic internaliser (SI).

“It [bilateral trading for blocks] never really took off as a product whereas the way I look at the more recent developments in bilateral liquidity, it’s for a lower liquidity demand which does feel more sustainable,” says Legal & General Investment Management’s global head of trading, Ed Wicks.

While historical bilateral connections with other alternative providers – namely XTX Markets – have historically been more focused on smaller flow, Optiver’s model offers the opportunity to trade blocks of 5-20% of average daily volume (ADV), The TRADE understands. And it’s this element that has piqued buy-side interest. It’s easy ‘fill or kill’ model means traders don’t have to go out to market in order to execute, simplifying workflows and reducing market impact.

“The liquidity provision workflow can be a useful tool, especially given the recent record lows of lit liquidity. If you can get done and risk filled, there’s an efficiency to that,” says Hayley McDowell, EU equity electronic sales trader and EU market structure Consultant at RBC Capital Markets.

It’s this efficiency that has seen the buy-side continue to use this model of trading to execute flow. According to BMLL Technologies data, as of November 2024, off-book on-exchange constituted 58% of all bilateral trading activity – around €376bn – evidencing how attractive this model is to firms in comparison with multilateral venues and platforms in the lit markets.

“If I see a workflow solution that is potentially saving costs for funds and ultimately delivering good outcomes for clients then we have to evaluate it,” adds Wicks.

“For us, it’s [bilateral] more of an efficiency workflow tool for the lower liquidity demand orders or baskets we have. We consume the feed into our EMS so when an order hits our desk we can see straight away whether the whole order can be fulfilled by the bilateral liquidity. Not having to declare anything is an asymmetric benefit to us because we can see whether that liquidity can be fully filled on a fill or kill basis.

“If we were to go into the secondary markets utilising a liquidity seeking algorithm that would have a cost relative to trading at midpoint on the bilateral feed. For a subset of our flow from a cost perspective and an efficiency perspective it makes a lot of sense to us to utilise that bilateral liquidity.”

In light of the growing bilateral sphere, agency brokers such as BTIG and Redburn Atlantic have also been busy launching services that aggregate and streamline liquidity from alternative and electronic liquidity providers (ELPs) and connect the buy-side with them via an EMS or via a custom algorithmic strategy, all with the aim of easing the strain on the buy-side by channelling liquidity to them via one location.

“Traditional liquidity aggregation is not an option when trading bilaterally, but connecting clients to multiple competing quotes – on a fill-or-kill basis – via a single access point saves them time, limits selection bias and increases overall hit rates,” head of trading and algorithmic solutions at Redburn Atlantic, Phil Risley, tells The TRADE.

“The challenge in optimising the approach to principal liquidity, is to balance the ELP’s need to understand the profile of the flow with which they interact and the requirement to minimise information leakage.

“Ultimately, the goal is to create a virtuous cycle, with high quality flow incentivising larger and more consistent quotes – aligning interests and ensuring everyone wins.”

Redburn’s offering claims to tackle issues around market impact by operating under a fill or kill basis. Each client order is matched immediately in its entirety with a single ELP or not at all. It is directly available to the buy-side with qualifying flow via their EMS as a custom algo strategy. A spokesperson confirmed that the firm is speaking with all of the major non-bank SIs regarding onboarding. The ELP liquidity is not aggregated but available from a single point of access.

BTIG’s offering currently takes in live streams from three ELPs. Based on client preferences, it streams the best quote into the buy-side client’s EMS. A source has confirmed that the number of provider partners used by BTIG is growing.

Said quote can be anything from mid to far point liquidity in different shapes. If the client wants to interact they click to instantly execute or use OMS automation. The client then faces BTIG for settlement so there is no additional onboarding required.

The client has the choice whether to remain anonymous or allow ELP to profile them which may result in tighter pricing. This offering is also available via BTIG algos which for some buy-side clients may fit workflow better with wheels.

Traditional banks strike back

Given the growth of market share seen by these alternatives, the market has also seen a wave of new interest in this area by the traditional banks as they look to maintain their market share and retain commissions.

Major sell-side have offered systematic bilateral liquidity for years now but the practice hasn’t seen mainstream adoption for several reasons. Historically connecting bilaterally to a CRB for example has always been seen as a bit of a blind play as you don’t necessarily know what else is in there. The services for blocks have typically also only been on an ad hoc basis for banks’ larger clients.

“The evolution of IOIs being sent directly to client EMS’ is a net positive and opens up further trading opportunities and importantly enhances workflows, particularly when offered alongside a robust TCA process to help manage the challenges of longer term parent level impact,” explains Goldman Sachs’ managing director and head EMEA electronic and program trading, Alex Harman.

“This year we have been working with the major EMS’ to utilise actionables to deliver liquidity in several products; blocks, IS and close benchmarks. Expect to see a lot more from us here in the future.

“Our systematic GMOC product was the first of its kind and remains a heavily used product as part of our close benchmark offering. More recently we launched our DTC Stealth product, which is a tactic within our SOR that leverages dedicated liquidity from our systemic internaliser, plus other non-displayed liquidity with the aim to fully fill parent orders.”

With alternative players now targeting larger flow, major sell-side are looking to create their own direct connections via EMS providers in order to compete in a second wave of the bilateral evolution.

“I know several [big banks] are building aggregators and liquidity workflows that try and mimic some of the bilateral features. Whether we see a pure bilateral product from the investment bank similar to what we see from the alternatives I still don’t know if that will be the case,” adds Wicks.

“More traditional liquidity providers like the investment banks are now looking at it with some degree of urgency to try and insert themselves into that workflow. I don’t know how many more [bilateral offerings] we would need frankly but we will look at them when they come.”

Fast food?

With both electronic and alternative players cementing their workflows and major sell-side looking to follow suit, the bilateral segment is becoming extremely meaningful for both the buy-side and the wider market. And this meaningfulness is what’s raising some eyebrows. With the proposition now irresistibly attractive to the buy-side, the longer term impacts are now being assessed.

“The issue comes if too much of your flow goes that way,” says McDowell. “It can also impact on-venue liquidity. If has a trader has a large order on the pad, they might go to an ELP first, then maybe an SI, before going to the order book last.”

Given the existing decline of lit, this natural evolution – and it is a natural evolution – has the potential to become a bit of a self-fulling prophecy as spreads and toxicity increase in the lit market.

“Most buy-side firms and a lot of market participants would recognise that it’s in most people’s interests to make sure that lit markets remain a functioning viable part of the market,” concurs Wicks.

Traditional sell-side bring with them whole swathes of other auxiliary services that are bundled with their services across settlement, payments and research to name a few. Electronic and alternative liquidity providers do not provide these extensively and their services are usually limited to the execution side of things.

“Longer term, if we end up with a large part of the market trading bilaterally then we may start seeing impacts elsewhere – for example, will traditional brokers start reducing resources in other areas to focus more on liquidity provision?” Asks Canwell. “Will we see reduced price formation and greater toxicity on-exchange if smaller orders end up in bilateral mechanisms?”

The role of the regulator

The question now being asked by many is: what is the role of the regulator? Some participants are asking whether it is fair that some market makers should be able to risk fill clients without operating as an SI and the associated pre-trade transparency.

Ultimately, given this is the natural evolution of where the market is heading, it’s hard to see an eventuality where regulators would step in to prevent it. Famously, regulators tried to tackle decreasing exchange traded volumes with caps on dark trading in Europe during the Mifid II Review and the multi-year tug-of-war esque saga that achieved an arbitrary result of deleting the 4% and 8% double volume caps (DVCs) in favour of a single cap of 7% has largely been criticised as a waste of time.

“If they [regulators] think too much is being done off-exchange and there’s not enough price formation on-exchange, potentially I could see them stepping in,” says Canwell. “One area where there might be more regulatory scrutiny is around the closing auction because there’s a lot more being done off the primary closing auction in recent years.”

One area regulators should and are looking to change is around transparency. Reporting flags were one such area that was focused on by both UK and European regulators in April in order to simplify the regime and try to understand a bit better where volumes are being executed within the market. The concept of what is addressable and what is not is something now being explored by participants and regulators and could result in further probing from watchdogs.

“Reporting changes had a profound impact on the liquidity landscape. It was confusing before and a lot of the flags didn’t necessarily make sense. There was a lot of repetition and noise,” says McDowell. “Traders are looking for more transparency in the off-book space. Some participants are using “off-book” as a means of printing activity, but peers and clients are unclear about exactly what off-book on-exchange is.”

All roads lead back to the consolidated tape. And there is, of course, the likelihood that we will have a consolidated data source in the next decade (fingers crossed). This will also bring with it extensive transparency that will help both participants and regulators alike to better understand and interpret the market picture around percentages of liquidity accounted for by different segments. Given how participants and regulators alike are turning their attention to the addressability of flow, it may even be a worthwhile venture to do an independent analysis of how stable pricing is in Europe.  

“The market structure needs to respond to this change in dynamics and central to this is the delivery of a consolidated tape in both the UK and EU so all market participants can understand what liquidity is available where,” said Eleanor Beasley, EMEA equities COO and head of market structure at Goldman Sachs. “Understanding the different mechanisms leveraged to deploy bilateral liquidity is important as is understanding where this volume is printing.”

The growth of various different trading workflows that fall under the bilateral umbrella is undeniable and certainly something that participants and regulators alike should be keeping tabs on. Whether or not it’s something watchdogs should intervene with is another matter. Bilateral liquidity only works to a certain size. There will always be a portion of the market that requires public markets and going out to find the other side.

The market’s natural evolution is what it is. If these providers are offering buy-side traders an attractive service, who’s to say it is wrong or right? Perhaps as Canwell noted earlier the onus is on the buy-side to steer the market in the “right” direction.

However, when an order hits the pad, it’s rare for a trader to sit back and think about the wider long term market implications instead of whether a workflow will achieve the desired best outcome for their trades and subsequently their clients. On the current trajectory, our markets are likely set to look fairly different in the next five years. Whether that’s wrong is one for the philosophers that walk among us.

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Elsewhere, Kevin Galvin was appointed as a sales trader in Redburn Atlantic’s Boston team. Galvin joined from Cantor Fitzgerald, where he spent the last 19 years. As part of his new role, Galvin will be responsible for growing the region’s high touch business.

Wells Fargo appointed John O’Neil as an equity trader. As part of the role, O’Neil will be based in New York. He joins Wells Fargo from JP Morgan, where he spent the last 17 and a half years. Most recently, O’Neil served as an equity traders at the bank.

XTX Markets appointed Igor Zelenberg to its business development team, where he will focus on building out the firm’s ETF efforts. As part of the role, Zelenberg will be based in New York. Zelenberg brings over 16 years of ETF trading experience to the role, having most recently served at Goldman Sachs. Elsewhere, he held positions at Getco/KCG, HRT and XR Trading.

The post People Moves Monday: Redburn Atlantic, Wells Fargo and XTX Markets appeared first on The TRADE.

Alexander Laux has been appointed as a new equity sales trader, based in Frankfurt, covering German clients primarily.

Laux joins Redburn Atlantic from Barclays, where he spent the last 14 years.

According to the firm, his experience in high touch, low touch and PT trading will help broaden the client base in Germany, which has already seen significant growth since the merger with Atlantic Equities.

Read more: Redburn Atlantic grows sales trading and execution teams following merger

Elsewhere, Kevin Galvin has been appointed as a sales trader in Redburn Atlantic’s Boston team.

Galvin joins from Cantor Fitzgerald, where he spent the last 19 years.

As part of his new role, Galvin will be responsible for growing the region’s high touch business – an area in which he has extensive experience.

“The arrival of Kevin and Alex is another important milestone for Redburn Atlantic as we continue to invest and to expand into regions that have significant strategic value for the firm,” Redburn Atlantic told The TRADE.

“We continue to take market share in both the US and Europe and these exciting new arrivals will enable us to continue on that growth path.”

The post Redburn Atlantic expands Boston and Frankfurt sales trading team with two new hires appeared first on The TRADE.

Legal & General Investment Management (LGIM) promoted one of its own to the role of head of US equity and foreign exchange trading. Gregory Corrigan was selected to take up the reins for US equity and FX trading after eight years at LGIM. Corrigan joined LGIM in 2016 as a trader in equity and FX trading, receiving a promotion to senior trader in 2019. Previously in his career he spent a year and a half at Fideuram Asset Management Ireland as a trader in equity and derivatives and spent nearly three years at ING Eurasia ZAO in money markets roles.

The global head of capital markets at German asset manager DWS, Keshava Shastry, has left the business, according to two people with knowledge of the matter. Shastry, a managing director based in London, had been with the firm for over ten years. While working for the investment manager, he was responsible for institutional clients including central banks, pensions funds and sovereign wealth funds and assisted them with asset allocation and best execution. Shastry was also responsible for leading the investment division’s foray into digital assets and decentralised finance (DeFi).

Andrew Celotto joined Kepler Cheuvreux as an equity high touch trader, having departed from Credit Suisse last September. He most recently oversaw the European mid-cap team at Credit Suisse. In his new role, Celotto will be based in Kepler’s London office. Speaking in a social media post at the time of his departure, Celotto asserted: “After 16 years of buying, selling and crossing European and emerging stocks at Credit Suisse, it’s time for a fresh start. While I’m sad to leave and about how it ended, I’m excited for new challenges and opportunities ahead.”

Stuart Parris was appointed head of sales at Euronext FX, overseeing a global sales team covering the Americas, EMEA and APAC regions. Parris has been with the business since 2018 and has held different senior roles during his tenure, most recently as director, EMEA sales focused on sell-side tier 1 client engagement. Prior to joining Euronext FX six years ago, Parris spent almost eight years at Brown Brothers Harriman (BBH), serving as division head: EMEA FX relationship management. Before that, he was an associate director – FX sales at HSBC global banking and markets, and prior worked for Bank of New York Mellon for over a decade, most recently as VP – FX sales.

Noelle Al Jaweini was appointed acting chief of derivatives at the Saudi Exchange following more than eight years with the business. Most recently, Al Jaweini served as chief of cash markets at the exchange and before that head of markets development. During her career, Al Jaweini has contributed to various industry initiatives, including having served as the first Saudi advisory board member for Bloomberg’s “A Fair Share” – an initiative which advocates for gender equality in the regional financial industry.

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Tony Atkins

Tony Atkins has been appointed UK head of sales trading. Atkins joined Redburn Atlantic in 2004 as a sales trader having previously served for eight years at Morgan Grenfell and two years at Marathon Asset Management.

Alongside his appointment, Redburn Atlantic sales trader Luc Demoulin has been appointed EU head of sales trading. Demoulin joined Redburn Atlantic in 2021 having previously served as head of dealing at Verrazzano and as a senior dealer at FrontPoint Partners.

“Tony and Luc embody all of the qualities that you look for in a head of sales trading. They lead by example, they have incredible client relationships and they drive our business forward every day,” Redburn Atlantic’s global head of execution, Andrew Quick told The TRADE.

“After the combination with Atlantic Equities last year – and since becoming part of the Rothschild & Co Group in 2022 – we continue to take market share in both Europe and the US and having leaders such as Tony and Luc in these sort of roles is absolutely key to continuing that trajectory.”

Luc Demoulin

Read more – Redburn and Atlantic Equities complete merger to form London-headquartered transatlantic broker Redburn Atlantic

European agency broker and equities research specialist Redburn and US equity brokerage Atlantic Equities completed their merger in August last year, initially announced in April. Since its completion the firm has significantly expanded its execution teams with new hires in London and New York.

Most recent was Brandi Bailey who was appointed to the sales trading team based in London in September after previously serving at UBS, Morgan Stanley, HSBC and Bernstein.

Alongside her appointment, Steven Priestley was selected to join the sales trading team in New York after spending the last seven years at Credit Suisse and Truist Securities.

The post Redburn Atlantic expands UK and European execution business with new heads of sales trading appeared first on The TRADE.

As markets become increasingly complex and interconnected, the need for speed, precision, and automation has become paramount. From the early days when algorithms were basic rule-based systems executing predefined strategies, to the present era of machine learning and artificial intelligence-driven models, the evolution of algorithmic trading is central to the adaptability of financial markets. 

“Algorithmic development has and always will evolve to achieve the best performance possible versus the client benchmark,” says Alex Harman, head of EMEA electronic and program trading at Goldman Sachs. “That would involve minimising footprint via enhancing order placement and internalisation, having extensive liquidity capture via the SOR and a framework of customisable algorithms built upon a fast, scalable algorithmic platform.”

Simplification and automation have been key focus areas on the buy-side. The goal is to enable high touch traders to adapt dynamically to market conditions while still ensuring that algo strategies remain simple so that those strategies can be correctly measured and compared. 

“On our systematic side, we have adaptive algorithms that are identified in our EMS and routed to multiple venues to achieve the optimal outcome,” notes Samuel Henderson, EMEA equities head trader at Invesco.

“This adaptive automation allows us to manage hundreds of orders quickly and efficiently at below pre-trade costs and most importantly without adverse selection. As we expand our database of measurable historic trades, our machine learning insights continue to enhance the decision making of our algos.”

Evolving client demand has driven innovation in algo trading. More traditional strategies, such as VWAP for example, have begun to incorporate machine learning and predictive techniques to remain relevant. Increasingly, clients are looking for more advanced methods of liquidity seeking, in particular in harder-to-trade stocks during liquidity events, such as the close and monthly expiries.

“Trading is always a trade-off between price impacts and opportunity risks,” says Ben Springett, head of electronic and program trading, EMEA, at Jefferies. “The longer I take, the more opportunity/risk I’m exposed to. We see a migration of strategies toward higher urgency liquidity seeking; we see people moving away from VWAP; and we see less people willing to wait for the closing auction.”

During periods of high volatility, some quant funds as well as funds which typically use long duration or schedule-based strategies such as VWAP or TWAP, will see a shift in urgency to go into more arrival like benchmarks such as liquidity seeking algos. 

“Clients that continue using schedule algos tend to shorten the order duration and in addition, they look to customise participation in the closing auction,” notes Harman. 

Volatility

During periods of increased volatility, algo strategies come to the forefront even though their usage isn’t necessarily changed entirely. Instead, it becomes a by-product of a change in objective of the buy-side trader. A greater sense of immediacy becomes apparent for traders in these periods, resulting in a shift in algo strategies.

Typically, as volatility increases, liquidity decreases, resulting in an increase in impact. In such periods, it can be observed that traders move from automated algo trading to high touch and portfolio trading, relying on more blocks. 

“As market volatility increases, we find clients tend to specify more algo parameters on an order level i.e., ‘offsets to benchmark’, ‘would levels’ and ‘smart scaling’,” notes Chris McConville, global head of execution services and trading at Kepler Cheuvreux Execution Services (KCx). “We also see an increase in customised algo usage. In more recent situations where market volatility has increased, we saw an increase in demand for agency blocks.”

Information leakage

When utilising algorithms, information leakage becomes paramount, especially when breaking up orders and dealing with multiple banks. Various techniques exist to help combat the issue, including splitting larger parent orders into smaller child orders to disguise the full intent of a trade, to both the market and a single broker. 

“Trading electronically can prevent word of mouth leakage – but similarly information leakage can be created by using the wrong algorithm or venue in the wrong way,” emphasises Invesco’s Henderson.  

Unpredictability also takes precedent. Firms need to be unpredictable when they respond to price changes, unpredictable in terms of size that they’re submitting to markets, while also maintaining an unpredictable stance in terms of their presence in the market. 

Reducing the predictability of the algo order placement – the child orders in the market – can also help reduce information leakage. In essence, preventing information leakage in algorithmic trading hinges on the intelligent design and execution of algorithms and SORs, notes McConville.

“Strategies like randomising order sizes, managing market entry times, utilising multiple and non-displayed trading venues, and deploying conditional orders are vital,” he says. “These approaches not only protect a trader’s strategy but also enhance the efficacy of their trades in a complex, multi-bank environment.”

Limitations of algo trading

As with any technological advancement, algorithmic trading has its limitations. Although these have narrowed, these strategies can still be improved. One of the biggest limitations is the lack of understanding related to the context behind the orders that are being placed. 

“Even the most sophisticated algorithm cannot know that the portfolio manager has been waiting three days to find liquidity, a potential catalyst is approaching, or that a bullish research note was published earlier that day,” highlights Phil Risley, head of trading and product development at Redburn Atlantic. “The algo will take the statistically correct approach, and adjust for a range of real-time signals, but that may not necessarily be optimal for that stock, for that PM, on that day.”

Algorithms are not one size fits all and another limitation to these strategies is that their appropriateness varies. Just because the tool was the most appropriate one day, does not mean it will necessarily be best tool on the next. Traders must consistently assess the usefulness of algo strategies and amend them appropriately to ensure they provide the best outcome. 

“There may be a change in market conditions, such that an algorithmic strategy was perfect yesterday, when there’s a significant amount of midpoint liquidity, there’s periodic auction, there’s conditional blocks and so on, and today that might not be the case,” notes Jefferies’ Springett. 

“Having an awareness of the real-time conditions that you’re trading into; helps you navigate the limitations of algorithmic trading.”

Another key limitation is liquidity. There is no magical way to create liquidity and algorithms may not be appropriate in every scenario. 

“Pre-trade metrics can give an idea of estimated cost and liquidity – which should help the trader choose the best way to start an order, be it via an algorithm, a high-touch desk, directly using broker capital on risk or any combination of channels,” explains Henderson. 

Most algos are based on a schedule and that schedule can be interrupted by events. This means that if volume is out of character, the algo must guess, which can ultimately lead to negative results. 

“Any algo is bound by the parameters the trader sets, unless the algo is customised. This is where understanding your algo tools is key. And, if you use more than one algo provider, you must make sure you know the differences between them,” stresses BNY Mellon Pershing’s equity trading desk manager, Matt Short.

Trader intuition

As with any technological advancement, the trader’s role shifts as it looks to adapt and improve workflow. Trader intuition is crucial, given that traders can see past historical data and utilise lived experiences to make the best decisions in unusual scenarios, which algorithms may not be able to detect.  

“Buy-side traders have an awareness of the stocks they’re trading, whether or not they’re sectorised, or arranged by portfolio management group, or whatever it might be – they have that underlying experience where they’ve seen a range of different conditions,” notes Jefferies’ Springett. “They’ve identified what can be successful and unsuccessful in those different conditions. And almost on a second nature basis, know what the right tool is for the job at any given point in time.”

Advancements such as artificial intelligence have proven to be beneficial to traders, however, these have been viewed as aids as opposed to replacements of the human trader. The same can be said for algorithmic trading strategies.

The buy-side have better internal tooling via their EMS or data provided by counterparty banks to help ensure they know the best time to use a certain strategy. Thanks to the continued evolution of electronic and algorithmic trading, buy-side traders are now inundated with growing data sets and pre-trade analytics to help determine what to do with a specific order. 

KCx’s McConville highlights that “while the efficiency and analytical prowess of algorithms are undeniable, the role of trader intuition in selecting the right algo remains indispensable.”

A benefit of algorithmic trading is its lack of human bias. Humans inherently have bias, be it conscious or unconscious– something that algorithms can avoid, making them more useful in certain trading scenarios. 

“If you are seeking to identify genuine differences that exist between different things, then having an automated process of managing the distribution of orders across those is critical. It’s impossible for a human being to remove all of their bias from any process,” adds Springett. 

Customisation

Central to much market debate in recent years as algorithms have developed is how much a firm should customise their strategies. Customisation comes with pros and cons, depending on what the algo is being tailored for. 

“When considering algo wheels, it is rare that an out-of-the-box strategy is going to be a perfect fit, so true customisations – specifically designed to take account of both the benchmark and the characteristics of the order flow – are more common,” notes Redburn Atlantic’s Risley. 

Although providing many benefits, customisation can also bring about more complexity, which could lead to increased risk of unintended consequences. To avoid these, robust tests, testing capabilities, QA testing, and change and release procedures are required to ensure that customisation does not impose unintentional consequences. The client’s desired customisation might also achieve different outcomes across brokers.

“While we try to build algos that work really well out of the box, we have several clients who each have different needs and requirements,” notes Goldman Sachs’ Harman. “What one client needs from VWAP or liquidity seeking algos doesn’t necessarily match what the next client will want in terms of performance, venues or urgency.”

Customisation can also increase cost and come with added pressures, including ensuring staff – especially new joiners – are trained up on each change to the algorithm. The buy-side have been vocal at industry events about the danger customisation poses to delaying updates to algorithms. When a new version of an algorithm is released, those firms who have customised it are often left until last to upgrade. 

“It is important to stay disciplined when developing [customised algo] solutions, in terms of documentation, increased testing, or even simply ensuring your client understands what the custom actually does in real life,” emphasises KCx’ McConville. “One thing is for certain, being efficient with customised solutions means you really need to understand agility, to avoid a drag on your resources.”

Central to agility is data. Like with anything linked to automation, data plays a crucial role in ensuring the success of any advancement. Algorithms require reliable sources of data around venue performance, smart order routing, liquidity profiles or opportunity costs to ensure they are beneficial to traders.

That data needs to be updated frequently to ensure the effectiveness of the solution, given that real-time data forms a key part of algorithmic behaviour. 

“It is important to understand that the execution landscape is continually changing and that historical data may not reflect today’s reality, but even more crucial is the recognition that the goal of any form of analysis is to develop insights allowing you to improve results,” notes Risley.

Looking forward

Although having its limitations and with areas of growth still existing, algorithmic trading continues to show promise as a trading strategy to help prioritise time and shift attention to more pressing orders. 

Algorithms are getting smarter and buy-side desks are equipped with more data and analytics to help with algo strategies alongside their tool kits becoming more sophisticated. Although limitations do exist within algo strategies, it appears as though these are narrowing. Algorithms are smarter than ever, but there’s still more work to be done.

The TRADE has actively been tracking developments in algorithmic trading over the past 17 years, by carrying out its annual Algorithmic Trading Survey. First launched in 2008, the survey now receives over 1,500 provider ratings from traders across the globe. To share your views please participate in the survey here.

The post Algorithmic trading: Smarter than ever? appeared first on The TRADE.

UK-based investment bank Peel Hunt appointed former head of electronic and program trading and sales at Numis Securities, Nishad Vallonthaiel, to head up its own electronic trading division. Prior to joining Numis, Vallonthaiel also served at Bloomberg Tradebook, Execution, Canaccord, C.I.M Banque, Banca Commerciale, and Lugano Espirito Santo Investment Bank. Also appointed to the electronic trading team at Peel Hunt alongside Vallonthaiel is Vinesh Chhaya, who joins the unit as a senior sales trader. Chhaya joins the bank after also previously serving at Instinet, Liquidnet, HAITONG, Canaccord Genuity and Numis Securities.

Bjørn Sibbern was appointed global head of exchanges at SIX, effective as of 1 January 2024, overseeing the Swiss and Spanish exchanges and the digital exchange, SDX. Sibbern is currently executive vice president and president of European Markets at Nasdaq and will also sit on the SIX executive board as part of the role. Sibbern has been active in the capital markets space for more than two decades and has worked in various roles for Nasdaq as well as other exchange institutions. As president of European markets as Nasdaq he currently oversees the Nordic and Baltic regions. According to an internal memo seen by The TRADE, Roland Chai – currently executive vice president of marketplace technology at Nasdaq – will lead the ETS business following Sibbern’s departure next year.

Redburn Atlantic made several new hires from the buy- and sell-side to bolster its newly merged business, as revealed by The TRADE. Brandi Bailey was appointed to the sales trading team based in London. She spent the last decade at UBS and previously in her career served at Morgan Stanley, HSBC and Bernstein. Alongside her appointment, Steven Priestley was selected to join the sales trading team in New York after spending the last seven years at Credit Suisse and Truist Securities. Also recently appointed at Redburn Atlantic is Daniel Kroff, who has been hired into the execution architecture team. Kroff has extensive algo strategy development experience having previously served at QUOD Financial.

Citi made a number of cuts to it cash equities trading business in London, according to two people with knowledge of the matter. David Lackenby, an event driven sales trader based in London, has left the bank, alongside Mark Brodie, a trader who also specialises in event driven strategies, the people said. Tracey Brown, director and a high touch sales trader covering pan-European markets, has also departed the business. Lackenby joined the bank two years ago from broker Market Securities. Prior to this he worked at financial services firm Cantor Fitzgerald for thirteen years. Brodie held positions at brokers BTIG and United First Partners before joining the US bank two years ago. Elsewhere, Brown had worked at Citi for sixteen years. Prior to this she served at Deutsche Bank.
 
UBS also cut a number of positions in its cash equities business in London following the forced takeover Credit Suisse, according to two people with knowledge of the matter. Roles were cut in sales and research, the people said, who spoke on condition of anonymity as the matter is private. While the exact number of people affected isn’t known, one banking source said the cuts were somewhat inevitable following the takeover of Credit Suisse. UBS declined to comment.

The World Federation of Exchanges (WFE) named Boon Chye Loh, chief executive of the Singapore Exchange (SGX) and Jos Dijsselhof, chief executive of SIX, as chair and vice chair respectively following a unanimous vote at a general assembly. The WFE board is comprised of 18 leaders from around the world, and both Chye Loh and Dijsselhof will serve two-year terms, the WFE has confirmed. Alongside the incoming chair and vice chair, John McKenzie, chief exec of TMX Group, has been named working committee chair.

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Brandi Bailey has been appointed to the sales trading team based in London. She spent the last decade at UBS and previously in her career served at Morgan Stanley, HSBC and Bernstein.

Left to right: Kroff, Bailey, Priestley

Alongside her appointment, Steven Priestley has been selected to join the sales trading team in New York after spending the last seven years at Credit Suisse and Truist Securities.

The pair will be responsible for growing execution volumes, Redburn Atlantic told The TRADE, and work within their teams to maximise on revenue opportunities gained from the firm’s recent merger to become Redburn Atlantic in August, and  becoming part of the Rothschild Group in November last year.

Also recently appointed at Redburn Atlantic is Daniel Kroff who has been hired into the execution architecture team. Kroff has extensive algo strategy development experience having previously served at QUOD Financial.

Read more – Redburn and Atlantic Equities complete merger to form London-headquartered transatlantic broker Redburn Atlantic

The new hires follow the completion of European agency broker and equities research specialist Redburn and US equity brokerage Atlantic Equities’ merger in August, initially announced in April.

The newly merged transatlantic broker, Redburn Atlantic, will be headquartered in London, offering clients broader research coverage, corporate access and research sales alongside agency execution capabilities.

Following the completion of the merger in August, the newly combined firms appointed Lisa Christou – former Atlantic Equities – as head of sales trading, US equities to international.

The post Redburn Atlantic grows sales trading and execution teams following merger appeared first on The TRADE.

Trading Technologies International (TT) appointed Gavin Miller as its new director of EMEA sales – TT Fixed Income. His move follows almost five years at fixed income aggregation and surveillance technology business, Algomi. Miller is a Bloomberg veteran having spent over 20 years at the company, holding several senior positions, including: global head of sales and account management (global markets electronic trading); global head of fixed income, currencies, commodities electronic sales; and global head fixed income electronic trading sales. Prior to joining Bloomberg, Miller worked as a credit trader at Salomon Smith Barney – now Morgan Stanley Wealth Management.

Redburn Atlantic appointed Lisa Christou as head of sales trading, US equities to international. Before taking on this role, Christou served as a US equities sales trader head at Atlantic Equities before its merger with Redburn, which was completed last week. Prior to joining Atlantic Equities, Christou spent six and a half years at Cantor Fitzgerald as a US equity sales trader, following eight and a half years at Wells Fargo in a similar role. Elsewhere in her career, Christou held a securities lending equities position at Citi.

Lily Chia was named the new head of equities and FICC sales at Singapore Exchange (SGX), working across Singapore, ASEAN, Middle East, India, and Australia. In this new position, Chia, who has spent almost two decades at SGX in various roles, will lead sales for equity, equity derivatives and FX derivatives. Most recently, Chia was head of business integration and  portfolio management, technology and prior to this, worked as head of commodities specialists and execution/clearing specialists. Before joining SGX, she spent three years as middle office and credit manager at DBS Vickers Securities, and before that worked as a senior associate working in corporate strategy at SIMEX.

The post People Moves Monday: Clear Street, Trading Technologies and more… appeared first on The TRADE.

Before taking on this role, Christou served as a US equities sales trader head at Atlantic Equities before its merger with Redburn, which was completed earlier this week.

Read more: Redburn and Atlantic Equities complete merger to form London-headquartered transatlantic broker Redburn Atlantic

The newly merged transatlantic broker, Redburn Atlantic, will be headquartered in London, offering clients broader research coverage, corporate access and research sales alongside agency execution capabilities.

Redburn and Atlantic Equities merged their operations under Redburn’s parent company Rothschild & Co, following an initial announcement on 26 April.

Prior to joining Atlantic Equities, Christou spent six and a half years at Cantor Fitzgerald as a US equity sales trader, following eight and a half years at Wells Fargo in a similar role.

Elsewhere in her career, Christou held a securities lending equities position at Citi.

Christou announced her appointment in a social media post.

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