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Foreign Exchange Infrastructure: Yesterday, Today and Tomorrow

In this exclusive to Traders Magazine, John Turney, Global Head of Outsourced FX at Northern Trust, discusses the evolution of the fx infrastructure and what is to come.

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May 1, 2011

S3 Routes Options Orders

By John D'antona Jr.

Software and service vendor S3 Matching Technologies introduced a free options order router to be used by retail brokers to send their orders to "routing" market makers. The new technology bases its decisions on real-time trade analytics.

The Austin, Texas., firm previously known for compliance and trade monitoring data offers retail clients a fully-hosted product that accesses multiple routing destinations with a single FIX connection.

According to S3 chief executive Mark Davies, the router determines where to send orders based on historical best execution statistics that have been incorporated into an algorithm located in the router. Brokers designate S3 as the order's destination in their own order management system and the algo and router do the rest.

"Broker-dealers are able to use real-time execution analytics to influence their routing decisions," Davies said. "Our hosted solution gives clients seamless access to our advanced algorithms, real-time reporting, and multiple destinations--without necessitating changes to their back-office infrastructure."

The algorithms automatically adjust, in real time, to the results of each trade, adapting the routing decisions to the client's needs.

S3 currently connects to one options routing market maker, Wolverine Execution Services. But it has verbal agreements to join with two others. It is currently routing orders on behalf of one broker-dealer, but is also in dialogue with others. The firm is also developing the same technology for the buyside.

 

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