Knight Capital Group (Nasdaq: NITE) today announced the introduction of agency algorithmic trading and smart order execution strategies developed specifically for the European equity marketplace.
Knight's EdgeTrade Algorithmic Suite for European equities is powered by FAN(TM), a smart order execution algorithm which sources liquidity from multiple exchange and MTF destinations simultaneously while adapting to market conditions in real time and re-circulating orders to where executions are occurring. Buy- and sell-side traders have used FAN to source liquidity and complete trade executions in the fragmented U.S. equity markets since 2006. With knowledge and experience from the success of FAN in the U.S., Knight has reengineered and customized its smart order execution technology for European equities, taking into account the microstructure and nuances of each market destination. FAN also allows for single-ticket clearing.
"Liquidity fragmentation in Europe is accelerating, with new market destinations forming and liquidity increasingly migrating away from the primary exchanges," said Bradley Duke, Managing Director of Institutional Electronic Sales in Europe. "Traders need tools to simplify the process of finding actionable liquidity. FAN is a dynamic smart order execution algorithm, adapting to market conditions in real time and routing orders to pools of liquidity where executions are most likely to occur. It allows clients to complete trades efficiently with minimum market impact and with opportunities for high fulfilment rates and price improvement. Knight also recognizes the complexities of equity clearing in Europe, so FAN allows clients to complete trades across multiple market centres on just one ticket."
The EdgeTrade Algorithmic Suite includes smart order execution algorithms based on FAN. Smart order execution leverages real-time and historical data to help clients execute orders by seeking out available liquidity among fragmented displayed and non-displayed markets.
These solutions include:
* FAN - Sweeps/posts an order simultaneously to public liquidity and dark pools, dynamically allocating the order to destinations where liquidity is located
* Covert(TM) - Posts and fills orders in dark pools exclusively
* Sumo(TM) - An aggressive strategy for quickly filling an order designed to reduce information leakage and minimize market impact
FAN also is incorporated into various benchmark and participation algorithms designed for European markets:
- Arrival Price
- Smart VTrack
- Target Close
"Knight committed significant technology and other resources to capture the nuances of both the European marketplace as a whole and the complex microstructures of individual markets," Mr. Duke said. "Knight is connected to all of the primary exchanges and MTFs throughout Europe and expects to continue adding significant liquidity destinations as they come on line."
Clients can access the EdgeTrade Algorithmic Suite through Knight Direct, Knight's multi-asset class execution management system, as well as through a number of third party execution and order management systems via Knight Direct's FIX capabilities. The algorithms and Knight Direct are recent electronic trading complements to Knight's existing London-based trade execution services. Knight provides high-quality, client-centric voice trade execution and sales trading services to more than 400 European clients, leveraging its network of local brokers and its worldwide reach to market centres.