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Ts Algo Survey

Ts Algo Survey

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Published by prasadpatankar9

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Published by: prasadpatankar9 on Aug 07, 2012
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01/10/2014

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The 2010 AlgorithmicTrading Survey
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his year both the accura-cy and depth of TheTRADE’s AlgorithmicTrading Survey increasedmarkedly. There were over300 buy-side evaluations of algorithmic performancewith the results showingthat only one in 10 respond-ents limited themselves to asingle suite of algorithms,compared with one in six in2009. With more buy-sidetraders using multiple pro-viders, there was significant-ly increased scope for indi-vidual respondents to bediscriminating in their eval-uation of respective provid-ers’ algo products.A total of 26 providers of algorithmic trading suiteswere identified and assessedby the survey’s buy-siderespondents. It was striking just how pervasive the useof algorithms has become,particularly among largebuy-side firms with over$50 billion of assets undermanagement. This grouptypically used algorithmictrading suites from up tofive sell-side providers, onemore than the previous year. Across all respondentsto the survey, over 45% of those questioned used fiveor more providers of algorithms.The main attraction of algorithms for the buy-side, both as a means toincrease trader productivi-ty and reduce marketimpact, has remainedremarkably consistent overthe three-year time horizon
Dark liquidity seeking algosemerge as best of breed
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of the survey. It seems thathowever sophisticated thealgo offering, the end resultfor the trader remains thesame. The one aspect of service that no longer elic-its the attention it receivedin 2008 is cost, once theoutstanding preoccupationof respondents (though tellthat to the head trader of amajor long-only firm inthe UK for whom the big-gest change in algo per-formance was the increasein price over the last six months).Overall, the survey found that close to one inthree buy-side traders isnow using algorithms totrade more than 40% of equities order flow, up fromone in four a year ago. In2008, when the survey began, fewer than one in 10respondents used algo-rithms for such a significantproportion of order flow.While this gives a clear indi-cation of the growingmaturity of buy-side tradersas loyal anddiscerning consumers of brokers’ electronic tradinggoods, it also hints at a reli-ance on algorithms to ‘clearthe noise’ during recentperiods of pandemoniumin the market.
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Market volatility appearedsomewhat of a ‘double-edged sword’ for algo usersin 2009. While a number of respondents observed that itled to greater dependence on
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Other: 12.4%Speed: 9.4%Ease of use: 7.5%Price improvement: 6.0%Reduced market impact: 14.6%Execution consistency: 9.0%Trader productivity: 15.0%Anonymity: 12.0%Cost: 14.2%
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One in three buy-side traders is now using algorithms totrade more than 40%of equities orderflow.

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