Latest Newport EMS Organizes Broker Algo Settings
Traders Magazine Online News, January 9, 2013
Buyside traders can now code their order tickets and algo instructions through the latest version of Newport, Instinet's execution management system. Traders can then send out a universal destination order ticket.
Newport's additional feature, dubbed "One Ticket," 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, according to 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. "We do not change the brokers' algorithms; rather the brokers alter their coding to match the universal settings of OneTicket."
This is the way it works: if a broker's algorithm has ten 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.
She adds with the usage of a universal ticket, buysiders can streamline their transaction cost analysis comparisons as the various broker algos can be compared on an "apples to apples" basis since they are standardized in OneTicket.
OneTicket comes as part of the Newport 3.15 rollout today.
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