Banks make changes to algorithmic trading processes, TABB Group claims

17 February 2011

Many major financial institutional institutions are making changes to the infrastructure surrounding their algorithmic trading, a financial research organisation has claimed.

A study by the TABB Group revealed that banks have continued to overhaul their systems by moving algorithmic trading functionality onto buy-side trading platforms and inserting algorithms directly onto client desktops.

Adam Sussman, a TABB partner, director of research and author of the report, said that dealers are hoping to embrace technological innovation and increase the level of sophistication surrounding trading behaviours.

He said that “these new marketed solutions are intended to streamline the execution process through support for limit prices (or spread); algorithmic functionality for multi-leg and cross-asset class orders; implementation of enterprise-wide liquidity management; and automated quoting and internal trade matching.”

The report highlighted that the increased demand for algorithmic functionality stems from the increased adoption of new trades which depend on the execution of two or more securities such as curves or basis.

Figures quoted in the study showed that Treasury notes have become increasingly popular among investors.

Trading volumes in this area have increased by five per cent every year since 2002.