Automated Trading Gets More Automated
Investment managers are relying upon technology to an ever-greater extent in the form of algorithmic and high-performance trading systems.
The technology team at Mumbai-based securities firm QuantCapital has a rich legacy in creating and designing customized solutions for clients. The 25-member, in-house team is also a leading developer of automated systems that efficiently execute spread trading solutions, by which orders are automatically generated and placed in the market.
Though there is human element involved in selecting stocks and spread levels, there is no human intervention in executing the trades. “We understand that making sound technology decisions to underpin core offerings will secure unparalleled results for clients,” said Sandeep Tandon, managing director and CEO at Quant Capital.
Quant Capital has selected CameronTec’s Catalys to provide advanced FIX connectivity and greater operational efficiencies for its trading platform.
“We needed a latency sensitive solution delivering superior performance to address increasingly complex markets and provide richer functional overreach in the critical areas of FIX routing, rules routing, message enrichment and custom development to achieve additional client stickiness,” said Tandon.
The nature of equity markets has evolved with the advent of computer-based trading (CBT) and high frequency trading (HFT). Some market observers have been critical of HFTs and this topic has become controversial.
“The recent emergence of HFTs is an indication that continued research and development of trading strategies, as well as debate on appropriate market structure, are important responsibilities of asset managers and other market participants,” according to a report by Norges Bank Investment Management (NBIM), the asset management unit of the Norwegian central bank (Norges Bank). NBIM manages the Government Pension Fund Global (often referred to as the Norwegian oil fund) and most of Norges Bank’s foreign exchange reserves.
In NBIM’s view, issues of concern to large, long-term investors more deserving of attention include anticipation of large orders by some HFTs leading to potential adverse market impact, transient liquidity due to high propensity for HFTs to rapidly cancel quotes real-time, and an un-level playing field among market makers from low latency ultra-HFT strategies.
Quant Capital does not engage in HFT but does utilize automated trading. Its dealing room is equipped with multiple trading workstations for the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). These are connected to respective exchanges with a high speed 2 Mbps leased line link for the BSE and a 2 Mbps leased line link for the NSE, with dual failover in case of lease line interruptions.
There is an additional fallback available in the form of VSATs in case of the NSE. The dealers are equipped with information sources, such as Bloomberg and Reuters, and live business news and general news television channel reporting.
The Catalys product that Quant Capital is using provides an integrated platform for operations, infrastructure and trading.
“With worldwide market demand for Catalys increasing as firms recognize the relevance and benefits of an open and flexible platform to underpin sophisticated trading backbones, we are pleased Quant can now offer its clients a superior service,” said Anders Henriksson, CEO at CameronTec.
At the core of CameronTec technology is an understanding of the FIX world that comes from a concentration of the world’s largest FIX deployments.
In 2013 CameronTec acquired London-based E2E infotech, a leading professional services and integration solutions provider for electronic trading and the capital markets. The merger has accelerated CameronTec’s professional and managed services, and streamlined system integration functions for customers including Quant Capital.
Agency broker moves beyond execution to offer a broader suite of services.
Algorithms have become more prevalent in the spot FX market.
QB’s Algo Suite for futures market trade execution is also being co-located to HKEX.
Breaking data silos is key to deploying automation beyond 'nuisance' orders.
They can be used on quantum hardware expected to be available in 5 to 10 years.