Search for Liquidity Intensifies
Changes in equity market structure continue to result in fragmentation, with the upshot that the search for liquidity will intensify.
“The fragmentation of markets, including the evolution of dark pools and off-exchange trading, will mean the search for liquidity will be a top priority for 2014,” said Rob Hegarty, global head of equities at Thomson Reuters. “We will continue to see a focus on risk management in the wake of all the regulatory change we have seen in the last five years. Another trend is changing market structure, including the electronification of trading, the proliferation of venues, and advances in technology.”
The search for liquidity has ramped up demand for trading networks such as Thomson Reuter’s Autex Trade Route, an order routing network that connects over 750 buy-side firms with 700 executing brokers and venues. “The interest and level of usage of indications in equities trading has been increasing because of the difficulty of finding liquidity,” said Hegarty. “A lot of firms have turned to IOIs–and routing–in order to increase their chances of finding liquidity.”
Autex Trade Route delivers order flow of two billion shares per day in equities, options and futures, as well as FX and fixed income.
Autex is the leading order routing and advertised trade network, Hegarty said. “We connect buy side and sell side clients for order execution as well as indications of interest. For example, a sell side firm may have a position they’re interested in moving, so they will send an indication, saying I’m a large buyer of XYZ stock, and that will either go to a single buy side firm, a targeted number of firms or a general broadcast. The sell side will then get a response from a buy side, saying they are interested. At that point, the firms can transact the trade.”
Thomson Reuters has moved Autex onto its Elektron network for improved performance, and has launched Autex Client Portal to give system administrators a real-time, interactive view of network status both within the firm and across counterparty connections.
“By moving Autex onto the Elektron network, our clients can take advantage of the breadth and scale of Elektron. Elektron is Thomson Reuters’ strategic infrastructure. It provides our customers with greater resiliency, higher performance, and greater reach,” Hegarty said. “The Autex Client Portal provides state of the art monitoring, alerting and measuring capabilities for the health and status of our clients’ Autex networks, on an easy to use, web-based interface.”
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.
Streaming blocks change the basis of matching and price discovery so institutions can find new liquidity.