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Building the Next Generation of Algos

Traders Magazine Online News, November 19, 2018

Catherine Zhao

While many buy-side firms trade on a suite of existing algorithms, is it time for a new breed of algo? Kathryn Zhao, Global Head of Electronic Trading at Cantor Fitzgerald, sat down with Traders Magazine's sister publication GlobalTrading to discuss the roadmap to building a new generation of algos.

Are algos commoditized?

Trading in todayís complex marketplace requires advanced technology solutions that are performant, robust and flexible. Plug-and-play algorithms used to be enough to satisfy the needs of large institutions who engaged in electronic trading; however, today it is a different story. Utilization of algorithmic trading is growing and so are the customization demands of the buy-side. Investments in analytics raise the bar for algo performance, while also varying the nature of a successful trading outcome. Modern, competitive electronic trading offerings are required to deliver† customized solutions tailored to each clientís specific trading preferences, and that fits our business model perfectly.

A helpful analogy is that of Precision Medicine, a medical model, where healthcare is customized according to each patientís specific characteristics. By targeting the context of each patientís DNA structure and tailoring a medical treatment, doctors can achieve the best healthcare outcome with the fewest side effects. Likewise, the next generation of algos must target each clientís trading DNA and optimize trading performance for each client. This is the exact definition of our Precision Algo Platform.

With growing sophistication of quantitative models and ever increasing electronic solution variety, buy-side firms face a unique challenge: how to choose a product that is straightforward to use and yet easy to customize. We kept these considerations in our focus when we designed our algorithmic trading platform.

Our Precision Algo framework is modular and easily customizable, with speed of turnaround in mind, to help traders reduce their order trading flow and take advantage of price and liquidity conditions as they occur.

Replicate or blaze a new trail?

Our Precision Algo Platform was designed from scratch, with latest technologies, armed by experienced electronic trading professionals, devoted to pure meritocracy and achieving the best results for our clients.

When we began the process of developing a new suite of next generation algos nine months ago, we had a late-mover advantage. The electronic trading technology landscape has experienced dramatic changes over the past 20 years. Innovations in hardware, networking, and software have had an immense impact on current state of the art technology. To truly stand out from the rest of the competition, an electronic trading product must be performant from latency and throughput point of view and resilient to failure without compromising capabilities and quality of execution. We took and will continue to take a craftsman-like approach to building and continually improving our software. Our platform is designed with performance in mind.

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