24 January 2018
visit www.ebaday.com

Pipeline Trading Systems unveils small cap execution strategy

01 December 2009  |  1615 views  |  0 Source: Pipeline Trading Systems

Pipeline Trading Systems, a leading electronic brokerage for institutions, announced today it is adding a special small cap execution management strategy to its anti-gaming technology.

The small cap system is engineered for opportunistic trading: able to trade very fast when appropriate, but not interfere with price formation or get caught up trading at the "wrong" price. The result is substantially better shortfalls than algorithms.

"Pipeline's small cap strategy is different from algorithmic solutions. These algos are either not opportunistic, or they rely on a 'fair price' model to choose opportunities and therefore can backfire badly when the fair price model is wrong -- most spectacularly in the fall of 2008," said Henri Waelbroeck, Pipeline's Director of Research. "The basic idea is to rely on a fair price model when appropriate, but know when to pull back and let the market find the fair price."

Pipeline's unique small cap system harvests dark liquidity through several dark aggregators, and uses liquidity opportunists ready to "pounce" on value in the displayed markets. It incorporates large block fills as appropriate, and can leverage Pipeline's encrypted, patented buy-side OMS network to identify latent contra liquidity.

"For small cap names, liquidity tends to be clustered in time. If small fills add up to a high participation rate, our small cap system will avoid posting limit orders and will carefully control the participation rate, both in the small-order markets and in block markets. This type of trading can be accomplished without interfering with price formation, so the stock is free to move favorably," said Waelbroeck.

The Pipeline small cap execution management strategy is configured to the specifications of individual buy-side traders and has reduced implementation costs for a number of Pipeline's buy-side clients.

"Half the battle in building effective algorithmic trading systems is maintaining integrity throughout the process," said Tereck Fares, CFA, Chicago Equity Partners. "This means resisting the easy temptation to acquire market share by blindly interacting with ELPs, fast money or the firm's proprietary trading if that applies. In the long term, discriminating traders will naturally flock to systems that dynamically assess market conditions and react accordingly while minimizing impact. This is especially critical when trading blocks of small and mid cap names for which Pipeline is providing some innovative solutions."

Comments: (0)

Comment on this story (membership required)

Related blogs

Create a blog about this story (membership required)
visit www.thomsonreuters.infovisit www.vasco.comvisit www.capgemini.com

Top topics

Most viewed Most shared
Banks shift priorities toward growth, digitisation and innovation - surveyBanks shift priorities toward growth, digi...
9773 views comments | 38 tweets | 48 linkedin
Standard Chartered establishes fintech innovation and investment unitStandard Chartered establishes fintech inn...
9477 views comments | 14 tweets | 14 linkedin
Sbanken opens developer portal and invites customers to build their own digital bankSbanken opens developer portal and invites...
8512 views comments | 17 tweets | 11 linkedin
Metro Bank joins digital revolution with instant online account openingMetro Bank joins digital revolution with i...
7031 views comments | 13 tweets | 25 linkedin
Could distributed ledgers restore the reputation of the MBS market?Could distributed ledgers restore the repu...
7008 views comments | 6 tweets | 9 linkedin

Featured job

London, UK (or flexible)

Find your next job