BUY-SIDE TECHNOLOGY AWARDS: Best broker-supplied tool/technology: Knight Direct–FAN

Nick Potter and Bradley Duke, Knight Direct

Buy-side traders keep firmly agnostic approaches to where they source their liquidity—lit, unlit, on- or off-exchange. A fill, at the end of the day, is a fill. As such, electronic trading tools geared toward sourcing the necessary liquidity should take into account all possible venues with that same degree of agnosticism.

Knight Direct’s Find and Nail (FAN) smart order execution system, this year’s winner of Buy-Side Technology’s best broker-supplied tool/technology, takes such an approach. Active in US and European equity markets, FAN utilizes aggregation technology to sweep and post orders simultaneously in light and dark execution venues, and bears no destination bias, according to Knight.

Developed in part to help clients deal with highly fragmented markets following Regulation NMS in the US and the Markets in Financial Instruments Directive (Mifid) in Europe, FAN now drives the broker’s EdgeTrade Algorithmic Suite, including smart order execution, benchmark and participation algorithmic tools; FAN users can thus reduce their market impact and reduce transaction costs by using the FAN smart order-routing tool.

Of particular value to buy-side traders is FAN’s customization option. This feature enables users to set their own best-execution parameters within the engine, emphasizing elements such as speed of execution, price or anonymity. Given how widely best execution can vary—not only between asset managers, mutual funds, pension funds and hedge funds, but within each of those sectors—Knight has been able to address a major market need as managers respond to investor and regulatory pressure to continually find ways of differentiating themselves when it comes to performance. —SE

Fragmented liquidity pools, until recently, a source of constant frustration for buy-side traders, are now significantly easier to negotiate thanks to Knight Direct’s FAN. 

“FAN powers Knight’s entire algorithmic suite, which encompasses smart order-execution, benchmark and participation algorithms. We are constantly developing this offering. For example, FAN’s new Order Awareness Technology efficiently sources liquidity using real-time information from all executions across all strategies. A key factor underpinning the success of our smart-order technology is the ability for client-focused customization. Knight understands that our clients’ best-execution parameters are different. One investor may place primary importance on price, while another may be most concerned with maintaining anonymity and liquidity. The development of FAN has involved considerable consultation with our clients and it is through these client relationships that we have been able to determine and adapt to their individual best execution needs. We are proud of these relationships and of the recognition that our offering has received in this year’s Buy-Side Technology Awards.”
—Joseph Wald, managing director, Knight Direct

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