All market participants have felt their margins tighten in the post-crisis regulatory squeeze. As the competition for liquidity from traditional providers has grown, agency algorithms have emerged as a remedy for the increasing inefficiencies and diminished liquidity in the fixed income markets. Not only do these sophisticated algos smartly work orders, but they also open the way for valuable transaction cost analysis.
|Jonty Field, Head of EMEA, Quantitative Brokers
Quantitative Brokers (QB) is a leading provider of algorithms to the futures and fixed income markets, which will soon be available on the TT platform. We sat down with Jonty Field, Head of EMEA, to better understand QB’s unique approach to agency algorithms and what they have to offer users on TT.
TT: Let’s start at the beginning. How did QB get started?
Jonty: QB was founded in 2008 during the financial crisis. Robert Almgren and Christian Hauff, both at a large sell side institution at the time, realized that fixed income traders were lacking the quantitative execution and cost measurement tools that were so valuable in equity markets. It would have been difficult to build these tools within a large bank, because the challenge of providing everything to everyone coupled with the requirement that it be distributed across different desks and regions, resulted in numerous, complex obstacles.
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Our Trade Talk blog has covered many diverse topics in recent weeks. But today it’s time to squeeze in a few words on new product functionality.
The primary focus of our new TT platform is simple: provide the best trading experience available anywhere. That’s an easy statement to make and sounds really nice, but it typically makes users roll their eyes. Why? Because delivering on that goal is extremely difficult.
But what about me?
As a trading system vendor, we deliver a set of functionality designed to meet the demands of a broad-based set of users, sometimes with very different needs. But there’s a dilemma in that product delivery model because the process of trading—and trading well—is a very personal endeavor. You want trading software that is customized to *your* style, not a bland, generic, cookie-cutter set of windows.
So how do we address that desire for custom-tailored software and be able to deliver it within a practical framework of commonly used functionality? Well, tucked within our new front end is a hidden gem called widget groups. The “secret” code to unlock this feature is easy to remember: “Control. Shift. Drag.” It’s that simple, but the end result is very effective.
It started innocently enough last summer. A consecutive string of down days, followed by a bounce.
The bounce low was quickly taken out with price pushing below $100, and then stabilized for a few days. No one really noticed, nor were there major concerns. “Crude’s back in the $90s, this is great! Gotta go fill up the SUV!”
And then a steady downward drift lower continued into autumn. The move to lower prices was relentless and morphed into a steep cascade down to below $50. Check out this price chart of the front month WTI crude oil futures over the past two years:
The remarkable downward price slide in the price of crude and its related impacts are now front-page news. I’ll let the experts debate the reasons why prices have been cut in half in just a few short months, and let others prognosticate on when it will stabilize. What I would like to do here is comment on some interesting phenomena that have occurred and a few reasons why all this is good for the futures industry.
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As part of writing this blog describing TT’s new order passing functionality, I went to the Internet, curious to see how the trusty Merriam-Webster dictionary defines the word “pass.”
Not surprisingly, most of the definitions are unrelated to passing an order, and you have to go all the way down to the seventh entry to find a definition that even closely aligns with the trading world:
“Pass: (7) to go from the control, ownership, or possession of one person or group to that of another <the throne passed to the king’s son>…”
While passing an order to another user or execution desk does involve the concepts of ownership and control, for complete accuracy I have to admit (with tongue in cheek) that order passing is just slightly different from the succession process in a monarchy.
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