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July 9, 2013

Buyside Wants Algo Clarity

By John D'Antona Jr.

Make electronic trading easier to understand!

That's what buyside wants from the sellside when it comes to algorithms, according to a new report.

They demand that the sellside either explain their workings in a straightforward manner or watch order flow go elsewhere.

That's what Woodbine Associates said the buyside requested in a new report, "Sales-Traders: Asset Manager Expectations from Low-Touch Coverage." Brokers must be able to provide greater understanding and knowledge of their electronic offerings, such as algorithms and transaction-cost analysis methodology, if they want to offer a better low-touch trading experience, the report said.

The report asked institutional investors how sellside low-touch execution consultants are performing and what they can do to win more of their business, said Woodbine principal Matt Samelson, author of the report.

A majority of buyside respondents said algorithms were the most important item offered by a low-touch desk. And yet only 46 percent of those surveyed said execution consultants can clearly and succinctly describe the operation and mathematical underpinnings of their algorithmic offerings.

 

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