RBC’s anti-predatory trading software system designed to ensure the buyside achieves best execution and keeps its intentions quiet has received a formal patent.
As first reported her back in April 2011, RBC Capital Markets is rolledout THORafterhiring a team of high-frequency experts and staff in 2011 to help its buyside cleints.THOR was designed asa new smart order-routing technology designed to prevent institutional orders from getting beaten to liquidity by rapid-fire traders.
At that time, THOR wasbilled to clients as an anti-gaming technology. The router was designed tonullify the time advantage HFTs have over others. It didthis by adjusting the routing speed of orders, so that each order in a stock reaches its destination at the same time as the others. The advantage to this strategy, at least on paper, wasthat multiple executions occur before HFTs are able to cancel their posted orders and run ahead.
Now, some 5 years later, THOR technology,has been granted a patent in Canada by the Canadian Intellectual Property Office. THOR was developed in-house by RBC Capital Markets, the corporate and investment banking division of Royal Bank of Canada.
THOR is a prime example of how RBC is developing and integrating innovative solutions and technological advancements to meet the needs of our clients, saidGreg Mills, head of global equities at RBC Capital Markets. In 2010, RBC was the first investment bank to introduce proprietary smart order router technology to combat latency arbitrage, a predatory high frequency trading strategy which erodes market integrity. Since then, THOR has played an important role in leveling the playing field for both retail and institutional investors.
THOR technology enables synchronized routing of split order segments to multiple exchanges without loss of fill rates, limiting the advantage that latency arbitrage users have over other market participants. Unlike conventional order routing technologies that send orders to multiple trading venues simultaneously and rely on speed of transmission, RBCs THOR routing logic determines when orders should be sent to multiple exchanges so that they arrive simultaneously.
Through the use of THOR and the underlying RBC patented technology, virtually all investor orders are filled on a regular basis.
Innovation is central to how we adapt as a business to provide our clients with an exceptional experience, Mills added. RBC continues to take an active role in the development of further electronic trading innovations to ensure fair and efficient markets for all participants.
RBCs THOR technology was launched in the U.S. in 2010 and soon after that in Canada and Europe. Aspects of the THOR system have been granted patent protection until as long as 2029 in the U.S., Canada, Australia, China, Japan, Mexico, Singapore, and South Africa, with patent protection pending in other jurisdictions, including: Europe, South Korea, India, and Brazil.
RBCcontinues to protectitsinvestments in innovation and technologythrough the development andmaintenance of itspatent and trademarkportfolio.
