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February 1, 2013

Newport EMS Organizes Broker Algo Settings

By John D'Antona Jr.

Instinet has added functionality to its Newport execution management system that is intended to make it to use multiple brokers' algorithms. Newport's additional feature, dubbed "OneTicket," helps buyside traders who use a single EMS to access multiple brokers' algo strategies.

One of the bigger challenges facing the buyside is that there are disparate terminologies and parameter settings found on their various destination tickets, said Erin Sheehan, product strategist for NewPort. She said OneTicket looks to solve that problem.

For example, one broker might have "passive," "moderate," "aggressive" and "super aggressive" urgency settings in their algorithms, another might use a numerical scale and so on. This can be confusing. It may even present a significant operational risk, Sheehan said.

"With OneTicket, users are able to create a single ticket for all algos where parameters are set once and normalized across all their counterparties," she said. "The brokers do not need to change anything about their algorithms' behavior. Rather they simply alter the algos' parameter settings to map to the universal settings of OneTicket."

The change means that the brokers must do some work: if a broker's algorithm has 10 settings and the equivalent OneTicket algo choice only has five, the broker would have to translate its algo settings to align with OneTicket. OneTicket can be used with basic algorithms such as implementation shortfall, volume- and time-weighted average price.

The functioning of the algorithm is not changed by Instinet.

OneTicket was part of the January Newport 3.15 rollout.


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