Cowen to Build Trading Tools to Support SEC Small-Cap Pilot Program

So how will traders be able maximize their executions should they opt to trade one of the small capitalization stocks designated to be part of the Securities and Exchange Commission’s small-cap pilot program?

To address this need, Cowen Group via its Cowen/ATM units, is initiating the development of a customized suite of electronic products and analytic tools for customers to efficiently trade the 1400 securities that will comprise the two-year pilot program.

The pilot program, designed to encourage more trading in stocks of small or emerging companies, will begin by May 6, 2016. The program will widen the minimum quoting and trading increments for stocks of certain small-cap companies to test for long-term changes to trading these stocks.

“Regulators have worked tirelessly to develop a pilot program aimed at helping to evaluate ways to improve trading liquidity for smaller companies, and now it is our job to develop appropriate products that will be available for clients starting on day one of the pilot program,” said Jeffrey Solomon, president of Cowen Group and co-chair of the equity capital formation task force, a group dedicated to supporting the country’s startup and small-cap company ecosystems. “We intend to work closely with our clients throughout the development process to ensure that these products help our clients to efficiently trade the securities participating in the pilot program and enable the SEC to draw as many meaningful conclusions as possible.”

Along with designing these electronic trading tools, Cowen/ATM will also walk its cleints through using the tools and assist in navigating the SEC pilot program.

“We are speaking with institutional clients, technology partners, exchanges and alternative trading systems to ensure we are creating products that incorporate feedback across the ecosystem,” said John Cosenza, co-head of Cowen / ATM. “Once the pilot program begins, trading rules will no longer be ‘one-size-fits-all.’ We envision new execution strategies, optimization of models and routing of existing products as well as tailored execution analytics for the pilot securities.”