EdgeTrade – the independent, agency-only broker and originator of smart order execution algorithms – today unveiled a white paper outlining causes and ramifications of market fragmentation. The white paper, “From Fragmentation to FAN: Intersection of Reg NMS/MiFID, Dark Pools and Charting a Clear Path to Actionable Liquidity,” is authored by the firm’s CEO, Joseph Wald, and President, Kyle Zasky. Smart order execution, a term EdgeTrade coined in 2005, is a next-generation algorithm designed to optimally and anonymously fill orders electronically through high-speed market connections, coupled with dynamically streaming and interactive quantitative, analytical and adaptive (to real time executions) methodologies. Clients of EdgeTrade, of which there are more than 220, include hedge funds, mutual funds, asset management firms and broker-dealers in North America, Europe and the Far East.
“Our clients turn to us for innovation in technology and execution services, but they also look to us for high-touch education in the use of such tools particularly against the backdrop of a fragmented market that is confusing to them,” said EdgeTrade CEO, Joseph Wald. “This white paper will garner a wide audience because the information within is candid, authoritative and conflict-free. EdgeTrade is a software firm that lives inside an agency-only broker-dealer. Coupled with our expertise in the microstructure of the market, EdgeTrade is the archetype of a new broker that traders, on the buy-side and sell-side, are looking to for best execution in absolute unconflicted and quantifiable terms.”
Numerous themes are addressed in the EdgeTrade white paper, including:
--Why fragmented markets (public and dark pools) are displacing smart order routing in favor of smart order execution tactics, as a means of rapidly uncovering liquidity and sourcing a best execution.
--Recognizing the silver lining in market fragmentation that is delivering liquidity, in unprecedented terms, directly to the hands of traders.
--How FAN, EdgeTrade’s foundation smart order execution algorithm, is a quantum leap ahead of algorithmic technologies given its ability to process, in milliseconds, as much as 10 times the volume of message traffic as a typical smart order routing tool.
“Smart order execution remains a new concept to some,” said EdgeTrade President, Kyle Zasky. “While they still struggle with dated terminology and ’dumb’ technology of smart order routing, the many traders who have quickly and aggressively adopted smart order execution are those who realize they now have it within their own grasp to tap sub-second shifting liquidity regardless of where it may reside; dark pools, public markets or a combination of both. The last several months of market volatility has resulted in extraordinarily high usage of EdgeTrade’s smart order execution algorithms which indicates that traders, when presented with the right tools, prefer to seek out liquidity through agency-only strategies that protect their anonymity. They are the new breed of empowered traders.”
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