BNP Paribas (BNPP)’ Alternative Trading System (ATS) launch in the US is the latest major step in BNPP’s efforts to build out its equities complex with the ongoing migration of Deutsche Bank’s Prime Brokerage and Electronic Execution business.
The ATS platform builds on the Bank’s existing Cortex platform across equities, FX, rates, and listed derivatives.
In addition, the offering complements BNPP’s recent acquisition of Exane, the cash equities business including equities research.
“The launch of the Cortex ATS completes what we think of as the core components of our equity execution offering,” Brian Fagen, Head of Execution Services – Americas at BNP Paribas, said.
Within electronic trading, BNPP has the full suite of algorithmic trading products, smarter routers, and the ATS which is available to clients to access from any one of those execution channels.
“We firmly believe that an ATS is a critical component in our effort to deliver best execution to clients,” Fagen told Traders Magazine.
The migration, which started in 2020 (and the transaction announced in July of 2019), is expected to complete by end of 2021.
The Cortex ATS, a non-displayed order book for listed equities, is essentially the re-build of what was the Deutsche Bank Supercross ATS, Fagen said.
“We are now starting to ramp up its volume in the US alongside ramping up the equity execution platform,” he said.
ATS is a core part of BNP’s electronic trading platform, said Fagen: “We believe that having an ATS is a necessary part of being able to deliver differentiated liquidity and improved transaction costs to clients.”
Recent Cortex Equities platform enhancements include new data center and exchange connectivity as well as new quantitative research driven upgrades to smart order routing logic and algorithmic trading strategies.
“We’ve added several significant upgrades into some of the core functionality,” Fagan said.
Within the algorithmic part of the process, BNPP completely rewritten its volume prediction models and added in elements of machine learning.
“In terms of venue selection, we have changed logic as it relates to how we think about both passive posting and aggressive taking of liquidity on various venues,” he said.
Fagan added that BNPP has been building the new technology in the last couple of years, which is a big advantage.
“New concepts and new implementations into market microstructure become really important in improving transaction costs for clients, which leads to better execution,” he said.
“We’re utilizing many of these newer thought processes, based upon newer technology, and we are able to do things in a different manner than legacy technology platforms,” he added.
Fagan believes that the clients are looking for more holistic partners across bigger parts of their business.
“For our asset manager client base, having a truly world class equities execution business, works very nicely alongside our other asset class verticals,” he said.
“This dovetails with the movement of the prime brokerage platform from DB to BNPP. Our institutional clients who are dependent on prime brokerage and private finance services look to those providers to also provide top quality execution platforms,” he added.