The capital is set to “optimise growth and expand trading opportunities” as the company looks to bolster its core business segments and grow in new markets “where current trading mechanisms leave significant value untapped”. 

Specifically, OneChronos is planning to launch new Smart Markets for other asset classes and geographies in addition to equities. 

“This funding validates our team’s progress in traditional capital markets and will help us achieve our vision of leveraging advances in market design and AI to find trade efficiencies that grow the global economy,” said Kelly Littlepage, chief executive and co-founder of OneChronos. 

“We’ve demonstrated how Smart Markets can transform trading in equities. Now we’re ready to bring these same innovations to other markets where traditional trading mechanisms leave significant value on the table.” 

To date, OneChronos has facilitated more than $500 billion in institutional securities transactions.

The business also continues to see strong month-over-month volume growth according to recent statistics.

The post OneChronos raises $32 million in funding round appeared first on The TRADE.

Several European exchanges are well underway with plans to bring out offerings of this ilk in the next few months The TRADE understands, while a handful of US alternative trading systems (ATS) are also preparing to make the crossing over to the Bloc to replicate the progress they have achieved in the US.

However, in light of notably low volumes and high levels of existing fragmentation, Europe now finds herself as the belle of the ball – she’s in high demand but there’s limited room on her dance card.

Innovation is, of course, always welcome and a central solution to Europe’s somewhat stunted markets – when compared with others around the world. And these venues’ approach to workflows have been hailed by institutional investors as a more stable means for institutions to get execution and remove adverse selection outside of the existing periodic auction function that has already seen success in Europe.

It is rare, for example, that you’ll find an asset manager worrying about the good of the market or how an order might influence the primary lit market share, over whether or not they have achieved the optimal outcome for their portfolio manager and end investor.

But while these players each have a niche and positive offering to bring to Europe, there will likely not be room for all of these contenders to gain meaningful traction. The real question is who will achieve first mover advantage?

A Flathead vs Philips screwdriver

The US players eager to make their debut in the pan-European markets, each bring a slightly different spin to their approach to matching trades. Each have seen success in the US, and so one can see how a move to Europe feels like a logical next step. Many of them also have Tier 1 backing which could be leveraged to gain traction with European counterparts in the future.

Eric Stockland, co-head of global electronic trading at BMO Capital Markets, explains that the venues largely fall into two categories: “It’s like a Phillips screwdriver and a Flathead screwdriver. They’re built for slightly different purposes.”

Those taking a more micro periodic auction approach include OneChronos and IntelligentCross. When trading on these venues in the US, you trade everything you’ve got at a single point in time.

IntelligentCross uses artificial intelligence to run a periodic auction model instead of traditional matching engine technology. The ATS offers both dark and lit liquidity, using machine learning to optimise price discovery.

It claims to match orders “near continuously” to achieve optimal price stability. It added intraday optimisation earlier this month – effectively allowing its midpoint matching capabilities to adapt in response to market conditions during the live trading day.

“Investors should not have to choose between liquidity and performance,” Roman Ginis, founder and chief executive of Imperative Execution, tells The TRADE. “We are always looking for ways to deliver scale and yet still minimise adverse selection and market impact.”

Alternative ATS’ that favour a trajectory crossing model include LeveL ATS, of which Nasdaq took a minority stake in 2021, PureStream (powered by Nasdaq) and Morgan Stanley’s ATS TrajectoryCrossing. Using these systems, you trade either at a rate or an average which ranges in duration.

Read more – PureStream: The disruptor venue determined to make waves in the institutional liquidity landscape

“The trajectory cross models are really important for clients whose algorithms are benchmarked to an average price over time for example like a VWAP algorithm,” explains Stockland.

“If you need to get VWAP for 100 shares or for $10,000, it’s really hard to do because you can only do that in a couple of trades. If you think of a really actively traded stock you might only get to sample price two or three times. It’s very hard to get the average but if you agree a priority to trade at an average price over some period of time you can exactly get the average.”

While not all of these venues’ moves to Europe are confirmed, PureStream and IntelligentCross are rumoured to be exploring opportunities in the region, The TRADE understands.

“Subscribers and clients have both made it clear that the unique value of Streaming in the US is something that they would welcome in Europe,” PureStream chief operating officer Sean Hoover told the TRADE. “We are excited about our partnership with Nasdaq, who has publicly announced its intent to roll out our streaming order types in Europe later this year, subject to the necessary approvals.”

A spokesperson for IntelligentCross told The TRADE it was open to European opportunities in the future but declined to comment on timelines.

Others such as OneChronos are much further along and are in the process of gaining regulatory approvals to launch in Europe and the UK. The TRADE broke the news in January that former LSEG’s Scott Bradley had been appointed chief executive officer of OneChronos’ London office, effective immediately. Alongside him, former SIX’s Adam Sherlock was appointed chief executive of the European office and head of the firm’s new European Amsterdam based MTF, effective from 1 April.

Due to launch following regulatory approval in H1 2025, the US ATS proclaims to leave speed out of the equation unlike the price time priority of existing periodic auction models. Instead, it takes dollar price improvement as its priority function.

“We are taking time as a discrete function, which is what you do when you use a periodic auction rather than continuous mechanism,” explains Bradley. “We allow market participants and their clients to compete directly on price and quantity by removing speed as a factor in execution quality, levelling the playing field for all investors.”

The ATS runs auctions roughly 10-15 times per second and then uses series of order collection, data buffer, and optimisation models. Auctions run concurrently across the universe of securities as opposed to independently timed single security auctions.

On the basis of this model, the ATS is therefore set to add ‘expressive bidding’ otherwise known as contingent trading to its arsenal in the US in the coming months. However, expansion plans for Europe will be focused on its core optimisation model for the time being, pending regulatory approval.

“You’re not treating each security in a totally isolated manner. You could for example manage a pairs trade through a periodic auction because you’re actually trading those securities at the same time,” adds Bradley.

“That is functionality launching this year in the US and so will become something available in Europe over time, however we are not looking to run before we can walk. What we are initially looking to launch in Europe will be more akin to the model in the US as it is currently today.”

The American dream

These venues have achieved success in the US and each bring innovative industry solutions to the table, however, with expansion plans brewing, the challenge now lies in gaining meaningful traction in Europe when the pie itself is not growing. Europe is not the US and achieving a 1% market share here is not akin to achieving it there.

Europe’s venue landscape is already one of the most fragmented in the world. Meanwhile rhetoric from regulators, particularly in mainland Europe, continues to encourage a push for greater volumes taking place in the lit continuous markets.

We don’t have a consolidated tape – if this is news to you then see me at the end of class – and this means for the time being any new venue looking to launch in Europe will not benefit from CT revenues. This marks a stark difference from the US where every lit venue or exchange receives a portion of revenue thanks to the best execution rule.

The elephant in the room: budget. Nothing comes for free and in pan-European markets, no one is obliged to connect to any venue. Brokers – particularly smaller ones – are continuously facing the conundrum of how to leverage new and innovation solutions brought to market while managing their technology spend.

Some are more fortunate than others in this department but for those who are not, they will simply not have the capacity to build out to all of these venues, and if they do, they risk spreading themselves too thinly across a myriad of options.

With this in mind, many could therefore take the stance that they should hang back until one or a few clear winners rise above the rest and become a fast follower. However, if all take this stance, then nothing will gain meaningful-enough traction to survive.

There is of course the option for brokers to connect to technology and OMS providers who do this connecting work on their behalf. They take in the quotes and data feeds and brokers can simply send a conditional order and look at prices. But again, this relies on said technology provider putting up the cash to build out to any or all of these new venues.

European exchanges

Enter Aquis and Cboe. While many European institutional investors are looking to the US for this much-desired trajectory crossing and upgraded periodic technology, there are developments rumoured to be taking place closer to home.

According to a source familiar with the matter, Aquis is rumoured to be launching a new TWAP and VWAP trajectory crossing capability towards the end of this year. Aquis declined to comment on the launch. Meanwhile, Cboe is also rumoured to have a crossing launch in the pipeline.

“The benefit that we have with new services is our long track record of success with orderbook innovation, and closely partnering with clients during the development process,” Natan Tiefenbrun, president of North American and European equities at Cboe, tells The TRADE.

“We deliver new services that clients want, on time and we make it as easy as possible from a technology perspective for these services to be adopted. We have built up a strong level of trust and support from clients which is a real source of competitive advantage to us when it comes to new product launches.”

When asked to comment on any new services in the pipeline, Cboe declined to comment.

While these offerings will not be a carbon copy of what the US ATS’ intend to bring over, one can see the appeal of leveraging an existing connection with an exchange partner to access said technology instead of having to fork out for new ones.

With all of these players now vying for the attention of institutional investors, it is likely that the early bird will catch the worm and some newer players may struggle to make inroads. Players such as OneChronos are expected to arrive in Europe in 2025 but with European players preparing to throw their hat into the ring before that, we could see a chunk of flow hoovered up before their boots touch the ground.

Cboe’s periodic auction is the beneficiary of said tactics and now dominates the market in Europe. April was an all-time record for Cboe’s periodic auctions across both average daily volume at just over £2.1 billion and market share which accounted for 6.3% of total continuous trading in European equities.

“Undeniably there’s an advantage to being first but that advantage is not insurmountable,” says Stockland. “The folks could come in and quote that slightly novel improved twist on the workflow. Workflow really matters in this business. It could come in and compete better on price.”

“It’s a big advantage to going first but I don’t think it will thwart others and it doesn’t preclude them from ultimately overtaking and becoming number one. Look at Cboe, they were upstart ATS 15/20 years ago and they dominate pan-European trading today.”

Private rooms

An interesting element of the US players is their capabilities with ‘private’ or ‘hosted’ rooms and whether or not this could be translated into their potential future European workflow. In the US, the use of private rooms – a not too distant cousin of Europe’s former Broker Crossing Networks (BCNs) – is prevalent amongst institutional players.

The option is available to participants who do not have the budget or technological or regulatory capability to run a venue but that are looking to interact with select number of firms. IntelligentCross runs this functionality and OneChronos is about to launch it in the US, The TRADE understands.

OneChronos’ offering is called Nexus and allows clients to create bespoke periodic auctions to trade with a select number of counterparties.

Fragmented liquidity has become a hot topic in European discussions and sparked some heated on-stage debate at recent conferences. BCNs were scrapped as part of Mifid II in order to make markets more compliant and push more volumes onto lit continuous markets.

However, increasingly bilateral and fragmented forms of interaction are becoming more popular in Europe despite rhetoric around the damaging impact they have on the primary markets. It’s an interesting one to watch, especially considering the potential for any venues that operate using this model to move over to Europe.

“There may be certain features which may be able to find their way into the European landscape,” says Bradley. 

“If you think about the trading that happens within SIs currently, there’s clearly an appetite for certain forms of bilateral execution but a straight translation from ATS private room into MTF would not meet regulatory requirements as is. What it does suggest is that there is an appetite to think about new dynamics of counterparty interaction.”

The landscape of periodic auction and trajectory crossing networks in Europe is set to flourish over the coming remainder of the year. Despite Europe’s volumes being low, these venues offer greater choice and competition for institutional investors looking to achieve optimal outcomes which could in itself go some way to boosting stats in Europe. While not all will be successful, some definitely will. In this instance, it’s likely the one that takes top spot will be the one that gets there first. Innovation will prevail.

The post Early bird catches the worm: A look at the race for first mover advantage in Europe’s emerging crossing network landscape appeared first on The TRADE.

Federated Hermes selected Imogen Hepsworth to join its trading desk as a junior credit trader. Hepsworth was appointed to the desk at the London-headquartered asset manager after spending the last four and a half years at MarketAxess in a facilitation trading role. She originally joined MarketAxess in 2019 as an operations analyst, moving into an analyst role in the fixed income venue’s Open Trading business a year later. In her most recent role as a facilitation trader covering London and the US, she serviced the institutional client base for platform trading all-to-all and credit.

UBS has chosen Aleksandar Ivanovic to succeed Suni Harford as president of asset management upon her departure, with the appointment effective from 1 March. Ivanovic has also been elected to the UBS group executive board alongside his appointment. He joined UBS back in 1992 and has worked across every business division since. Prior to this most recent appointment, was head of client coverage and head of the EMEA and Switzerland regions for asset management. Ivanovic has also previously held leadership roles at Credit Suisse and Morgan Stanley. 

Vontobel Asset Management appointed ex-Credit Suisse senior executive, Andrew Jackson, as its new head of fixed income, replacing Simon Lue-Fong who is departing after three years in the role. A spokesperson told The TRADE that Jackson will oversee a team of 39 investment professionals in his new role. London-based Jackson was previously head of fixed income at Credit Suisse for almost two years, having served in the same role at Federated Hermes for five years prior to that. Previously in his career, Jackson spent 13 years at Cairn Capital, most recently serving as chief investment officer. 

Citi created two new equities roles, appointing from within, in a bid to drive its equity business strategy and “cement the gains made in the derivatives business,” according to an internal memo seen by The TRADE. Robert Smolen was named head of exotics trading, having previously served as head of EMEA equity exotics and global hybrids trading following his move from JP Morgan in 2017. The second appointment was that of Yohann Freoa as head of index flow trading – effectively expanding his remit to cover all clusters, having previously served as European head of flow trading. Prior to Citi, Freoa held senior positions at both JP Morgan and Goldman Sachs.

JP Morgan appointed Oliver Hall vice president, futures and options (F&O) hybrid sales trader. Hall was promoted to the role after serving at the bank for nearly 6 and a half years, most recently as associate, F&O electronic sales trader, in Frankfurt, a role he has held for the last two years. Prior to that, Hall held the same role, based out of London. This followed an 11-month stint as associate, clearing client service manager – also based in London. Before joining JP Morgan, Hall held analyst roles at Rothschild and Barclays Corporate Banking. Elsewhere in his career, Hall served as an intern at BNP Paribas, Morgan Stanley and Rothschild.

Omar Darwish joined fintech pioneer GTN as equity sales trader following a three-and-a-half-year stint at Arqaam Capital. His appointment comes as GTN continues its expansion efforts to build a comprehensive electronic trading and investment platform. Prior to his appointment as equity sales trader at Arqaam Capital in 2020, Darwish was director at Beltone Financial and before that worked as VP sales trader at Renaissance Capital. UAE-based Darwish has also worked as sales trader at investment banks Credit Suisse and Commercial International Bank (CIB). 

The post People Moves Monday: Federated Hermes, UBS, OneChronos and more… appeared first on The TRADE.

Former LSEG’s Scott Bradley has been appointed chief executive officer of OneChronos’ London office, effective immediately. Alongside him, former SIX’s Adam Sherlock has been appointed chief executive of the European office and head of the firm’s new European Amsterdam based MTF, effective from 1 April.

The pair will lead the ATS’ push into Europe, co-heading its European Franchise.

Scott Bradley

OneChronos is a smart market, aiming to use mathematical optimisation to match counterparties for institutional investors. It claims to address “the gap between how trading venues match orders and how traders need to execute.”

Bradley left LSEG in November 2022, becoming the latest senior departure to leave the firm as part of a wider simplification of the firm’s leadership across asset classes, as reported by The TRADE.

He had been with the exchange group for nearly six years, joining as its head of sales, marketing and global business development, for its cash secondary markets and Turquoise in 2017.

He took on his most recent role as head of sales and platform distribution for securities trading at LSEG in May 2021.

Read more – Scott Bradley latest senior departure in LSEG re-structure

Adam Sherlock

Prior to joining LSEG, Bradley served in several senior roles at Instinet including as head of EMS and analytics sales for EMEA. He also previously spent 11 and a half years serving in electronic, algorithmic and program trading and sales trading focused roles at ITG, Goldman Sachs, Bear Stearns & Company, JP Morgan and Nomura.

Bradley’s exit followed the departure of Dr. Robert Barnes, chief executive officer at Turquoise, which was also announced in the same month. He left LSEG at the end of 2022 after nine years with the exchange group.

Sherlock had served with SIX for over five years, initially spending two and a half years at the exchange from 2016 to 2018 in an equity sales role before a two and a half year stint at LSEG in a business development role. He re-joined SIX in his most recent European equity sales role in 2021. 

Previously in his career, he spent two years at SimCorp in a business development role.

The post Former LSEG and SIX senior individuals join US equities platform OneChronos as part of European expansion appeared first on The TRADE.

Speaking at TradeTech 2023, representatives from HSBC and Natixis joined head of EMEA equities at BestEx Research Matthew Cousens to discuss how asset managers can leverage the latest applications across their trading desk to access unique liquidity pools, enhance price discovery and access real-time market insights.

While the capabilities of artificial intelligence and machine learning were praised by the experts who admitted they would have a place in the future of the trading desk, it was the application of the technologies among other challenges which were hotly debated.

“It’s a valuable tool because it is a paradigm shift from traditional software engineering activities,” said George Marootian, head of technology, Natixis Investment Managers.

“Anyone that’s been in this industry for a couple of decades has seen different software languages come and go, [they’ve seen] web 1.0 and 2.0, social media and different paradigms that have contributed to improved activities on the trading desk. What AI allows us to do is leapfrog decision signs, and really accelerate finding answers to key questions…but, it’s not a silver bullet, or a tool to use everywhere.

“There’s still a requirement for straight through processing, robotic automation, and there’s a whole other realm of digital technology that’s not AI oriented.”

Daniel Leon, global head of trading, treasury management & global solutions, HSBC Asset Management, had been adamant on another panel in the day that everything should come back to data and finding liquidity, and continued on the same thought path during this panel discussion.

“If you want to do best execution then you need to know what you’re doing so if you’re using AI that’s calibrated based on the past to get the best outcome then it’s not of use that you can trust it to know what you’re doing in the future,” he said. “That’s going to be a challenge and that’s why – for me – it’s not necessarily the way I want to go.

“What I believe AI will help us do is quickly – when you have an illiquid trade – pick up the elements of information – unstructured info – and use it to tell you that last week this traded at this level and especially for the illiquid trade it will help us find this path to liquidity.”

Among the other issues mentioned around the use of AI and ML was explainability, which was a notion repeated throughout the panel.

“We all need to very understandably be able to explain how processes work to our customers, stakeholders and regulators,” said Jesse Greif, COO, OneChronos, a technology outfit which describes itself as being “at the intersection of capital markets, machine learning and mechanism design” providing execution venues to those in the electronic trading world. “There’s this balance of having solutions which are blackbox in nature which potentially inhibits the evolution and application of machine learning techniques. They are very data intensive, you need clean data,” he added.

He described this explainability issue as one of a handful of factors which has “slowed progress in this domain in relation to spaces outside of financial markets where we have seen faster evolution of these type of techniques.”

Also contributing to the slower pace has been resources and expertise, given that some of the skillsets needed to oversee processes and deploy the technologies are specific and outside of the domain of many current team members within buy-side organisations.

Marootian agreed: “The skillset of the resources that are going to be able to help you progress AI/ML initiatives are not typical resources you have in software engineering teams. It’s a much more data intensive, analytics mindset.

“A lot of people trying to move software engineers and data folks into the AI space, or taking visualation folks and training them up and all of a sudden they are data scientists.”

Other concerns include transparency and the potential misuse of AI/ML.

Greif – an expert in the field – said regarding the misuse of the technologies impacting investors that there is a need for transparency, benchmarks and guardrails and urged users of the applications to press their brokers or advisors on how these applications work and who is working on them is important.

“Are you using something offline to coach something that’s deterministic and explainable? Are you using a blackbox solution but you have some benchmark that is a standard explainable benchmark to know if it is performing or underperforming?” he stated. “There’s an emerging field called computation ethics – or machine ethics – which really dives into this topic, specifically talking about a trade-off versus accuracy and fairness.

“[But] you really have to spell out what’s important and therefore the desires have to be sensitive about it,” he concluded.

Ultimately the panel came across very cautious on the use of AI/ML despite conceding it will be a part of the desk of the future. “We want to press ahead, but we need to be careful on how we do that,” said Cousens.

Meanwhile, Marootian added: “It will definitely part of the arsenal, but not the answer to every question.”

The post TradeTech 2023: Artificial intelligence is not a silver bullet, say buy-side experts who see challenges around explainability, resources and transparency appeared first on The TRADE.