Barclays has introduced an automated capital commitment feature available through select equity algorithmic trading strategies for US clients.
This new functionality, called capital commitment, allows clients to partner with Barclays in creating liquidity and transferring risk.
"The capital commitment feature is the first of its kind in the industry," said Joe Corcoran, Head of Equities. "We are delivering the benefits of both high-touch and low-touch trading to our clients in a unique way that protects their anonymity, provides them with liquidity and reduces their total execution costs. Offering capital commitment on our algorithmic strategies will help to drive workflow efficiencies for our clients and strengthen Barclays' position as a center of liquidity."
Clients must be entitled by Barclays before they can use the capital commitment feature. Once set up, clients can select the feature on a per-order basis through a simple check box on their algorithmic order screen. Barclays determines the level of facilitation in advance with each client based on liquidity needs, and may revise it based on quantitative evaluation.
With the capital commitment feature enabled, a portion of the client's order is automatically transferred to Barclays' central risk management book, thereby providing the client with instant liquidity as well as saving them the execution cost associated with that portion. The firm soft launched the feature with a small group of clients with very positive feedback.
"Our early adopter clients have seen significant improvement in the average execution price of their algorithmic orders with capital commitment versus without," said Bill White, Head of Equities Electronic Trading. "We are simplifying clients' work flow, liquidity capture and execution risk management, all at the push of a button."
The launch of the automated capital commitment feature is the latest among recent initiatives from Barclays aimed at making liquidity capture more efficient for clients. In October 2012, Barclays began reporting its electronic trade volumes for US equities on the Bloomberg Professional service to give clients more transparency into the firm's liquidity. At the end of 2012, Barclays launched DirectEx, a registered ATS for actionable IOIs (indications of interest) built to help clients find and execute block trades. Barclays mainly distributes its actionable IOIs through the Bloomberg IOI network.
Joe Corcoran added, "As Barclays continues to work to attract diverse sources of liquidity and aggregate them across our entire Equities franchise, our clients benefit from both the unique liquidity we can provide as well as our enhanced ability to partner with them on risk trades."
Barclays plans to roll out the automated capital commitment feature next in EMEA as part of the ongoing development of its global electronic trading platform.