The Buy-Side Technology Awards category for the best algorithmic or direct market access (DMA) provider has seen its fair share of upheaval recently. Since 2012, no winner has been able to repeat its victory the following year. FlexTrade won the category last year, while Deltix (2013), ConvergEx (2012), and Credit Suisse AES (2011) have all been in the winners’ circle. It seems fitting that the category features so much turnover, as the nature of algorithmic products and services is so competitive to begin with due to the demands of their buy-side clients.
This year, Dash Financial, a New York-based pure agency broker-dealer, established in 2011, pulled off the win, thanks to its Sensor algo suite and Algo Wizard.
David Karat, Dash’s chief marketing officer, says the vendor believes algo trading underperformance boils down to three things: technology deficiencies, lack of micro-structure expertise, and routing decisions made for reasons other than achieving the client’s objective.
“The buy side has been in the dark—not only have buy-side firms had to assume that they were being directed in the most optimal method for their strategies and liquidity/cost requirements, but they didn’t have the tools required to perform performance attribution and further enhance performance,” Karat says.
With that in mind, Dash created a suite of tools for the buy side that caters to its demands, while offering real-time transparency. Dash’s Algo Wizard enables routing methodologies to seamlessly evolve without the need to wait for lengthy release cycles. Clients also have the ability to make tweaks to any of Dash’s products.
“Whether it is how an algo performs pre-open, how it randomizes, how it uses certain liquidity centers, how size is calibrated, and how it reacts to liquidity and price changes etc., we use the Algo Wizard to effect these changes for an instant roll-out,” Karat explains. “EOS, a second-generation low-latency routing architecture that enables extreme liquidity capture, was launched over the past year; there were also enhancements to the Dashboard 2.0 architecture that included data visualization tools and techniques.”
Option-X, an algorithmic suite and crossing solution for US-listed options, incorporating all available electronic crossing mechanisms, was also unveiled in the last 12 months. The routing logic is geared toward optimizing exchange-fee structures and contra-party interaction rates. According to Karat, electronic execution is a scale, with liquidity capture at the one end and fee optimization at the other. Dash, he says, provides the tools to allow clients to sit wherever they want on that scale.
James and Anthony talk about the looming Sibos event in Toronto and take a look at some recent M&A activity and blockchain developments in the capital markets.Subscribe to Weekly Wrap emails