Pipeline Trading Systems, a leading electronic brokerage for institutions, announced today it has launched Pipeline Munitions Manager, a tool for minimizing implementation shortfall losses in markets with high risk of adverse information.
The new strategy assists traders in maximizing leverage of their primary weapon -- their sole knowledge of the full size of a large order -- in pursuit of a best price objective.
Unlike volume participation or VWAP strategies, Munitions Manager is designed to achieve best price, not to track or forcibly create a VWAP benchmark. It is not defined by rigid a-priori constraints on volume participation, but decides how many shares to release based on the current market conditions and completion objective. The strategy manages shares (or "ammunition") to capitalize on both price and liquidity opportunities.
"Munitions Manager aims to beat the average price benchmarks by managing tactical limits dynamically to capture optimal price points," said Henri Waelbroeck, Pipeline's Director of Research. "It complements the predictive algorithm switching based on real-time market conditions. While algorithm switching handles the decisions on how to best interact with the dynamics of the order flow in a complex market structure, the munitions management approach implements the trader's longer term objectives for the execution of the whole order -- exceeding performance expectations has never been easier."
Munitions Manager is currently available and has been successfully deployed with several buy-side firms.