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May 4, 2012

Wolverine Launches Homegrown Algo

By Peter Chapman

Wolverine Execution Services, a Chicago-based agency brokerage, is making available its first algorithm for equities trading.

Called "Best X," the algorithm is considered an "arrival price" algorithm. It attempts to fill orders at prices as closely related to the market prices in effect at the time the trading desk received the orders.

Wolverine is a subsidiary of Wolverine Holdings, operator of the well-known options market-making unit, Wolverine Trading.

Prior to the launch of Best X, Wolverine Execution Services made available the algorithms of other brokers to its clients. Best X tops them all, however, WEX chief executive Jim Michuda says. The exec explains that he compares the performance of Best X against the other algos it distributes on a daily basis.

"We do it better," Michuda said. "We are saving our clients a lot of money."

That includes sister company Wolverine Trading, which must hedge its options positions with stocks. Behind the success of Best X, Michuda notes, are the quantitative models the agency brokerage built to trade the 5,000 or so stocks with which Wolverine Trading must hedge. Another hallmark of the algo is the fact that it alleviates the user from making adjustments.

The operation of the algorithm is entirely automated and reacts to changes in market prices and liquidity in real-time, Michuda explained.

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