EdgeTrade – the independent, agency-only broker and developer of algorithmic and direct access (DMA) software – today introduced FAN, a new smart order execution algorithm.
FAN is available to buy-side and sell-side firms through Execution Management System (EMSTM), EdgeTrade's front-end platform for anonymous single stock and basket equity trading. The proprietarily developed and independent EMS was first introduced by EdgeTrade to its institutional client base in 2002. FAN and EdgeTrade's full array of algorithmic strategies and direct market access order types are also available through leading trading and order management systems and via FIX.
FAN enables traders to "Find and Nail" best execution in an increasingly fragmented marketplace prompted by Reg NMS, a series of initiatives adopted last year by the Securities and Exchange Commission to modernize and strengthen the national market system for equity securities. Reg NMS will, in 2007, require brokerage firms to send orders to destinations with an electronic quote that is the best in the market. Using FAN a trader can have an order sent to major destinations of liquidity, public and private, simultaneously. FAN pinpoints trading opportunities by tracking available liquidity, and continues this process until the trade is completed.
"As an unconflicted, agency-only broker, we look at the market's changing micro-structure differently and respond with solutions that do not compromise our clients' trading objectives," said EdgeTrade CEO, Joseph Wald. "Brokers with stakes in public, private execution destinations will want to see their clients' order flow head in that direction first before moving to another point of liquidity. That slight delay can cost their clients. EdgeTrade has no destination bias except those that bring our clients best execution instantaneously."
EdgeTrade's pioneering of smart order execution strategies began last fall with the launch of Sumo, a category breakthrough that addresses traders' desires to immediately complete a trade while mitigating market impact and eliminating information leakage. Sumo is an algorithmic antidote to market orders that can expose a trader's hand, as well as time consuming limit orders. Sumo and FAN complement EdgeTrade's expansive portfolio of benchmark algorithms.
"EdgeTrade's response to Reg NMS and market fragmentation is proactive," said EdgeTrade President, Kyle Zasky. "Brokers aligned with exchanges, ECNs and dark books are likely to take a passive stance when it comes to the placement and timing of client orders. Our systems were developed to thrive in the sort of environment that Reg NMS is fostering. As an expert in the market's micro-structure, EdgeTrade has all the connectivity in place to help traders reach their fiduciary obligation of obtaining best execution regardless of where it may be found."
A trading hub, EMS offers high-speed connections to multiple execution venues, DMA order types, algorithmic trading strategies and low latency market data. While a holistic offering, EMS is modularly designed to give traders what they want through customized screen specifications. A trader may, for example, integrate EdgeTrade's algorithms into their own front-end rather than using EMS. As an open platform, traders have the option of connecting to EMS via FIX or other trading and order management systems.