Buy-side Perspectives Issue 14 Special edition | Page 46

strategies leverage these signals coupled with
advanced simulation models to adapt their
behaviour to changing market conditions
throughout the trade cycle. Barclays has
incubation laboratories, in London and the US,
the Rise facilities where we house and fund,
at least in part, a number of fintech firms. We
spend a lot of time and investment in how to
use new innovations and technologies to our
clients’ advantage. “
• Advanced back testing and simulation.
“We are spending a lot of time looking at how
new, advanced simulation models can help
enhance our product offering. Accurately
predicting how our SOR and trading algorithms
may impact the market and what performance
can be achieved in the alpha generation process has huge
potential. It has, until recently, been very difficult to prove
for clients the breakdown of cause and effect isolating
your market impact from natural alpha in an order. Our
simulation models are being developed with the help of
specialist fintech firms to better model the outcomes. It is
now a key component of our signal generation.”
Matthew Cousens at the K&KGC ATF Equities London
Our latest SOR optimisation has already increased our hit
rate by 10%, meaning we now have fill rates across Europe of
around 97%.”
What do you think is unique about Barclays’ services?
“There are a number of ways Barclays differentiate from other
sell-side firms. We focus on services and technology in addition
to unique liquidity offering.”
• Low latency DMA and FPGA. “Barclays has amongst the
most advanced low latency DMA and FPGA solutions
available. In 2018, this product was brought under the
umbrella of Naseer Al-Khudairi who joined Barclays from
Credit Suisse in March to run Global Multi Asset Electronic
Trading. We can leverage this market leading low latency
technology within our SOR and ultimately gain faster
access to liquidity. Our FPGA technology is capable of
processing an order in less than 300 nano seconds -
including receiving an order, verifying it, risk checking and
sending the order to an exchange. Marrying cutting edge
technology with the rest of our cash equities business will
certainly improve the outcome for our clients.”
• Transparency and control. “Our “Specs” portal specifies
our client’s routing preferences which they directly
configure and make changes to as they wish. We offer full
transparency to our clients with information about which
venues we traded on, with our TCA and our real-time FIX
messages, including all venues.”
• Mid-touch experience with senior staff. “We have
added skilled high touch staff to our low touch service
desk, retaining experienced staff and delivering a better
service to our clients. Some of our buy-side clients are
already trading 80 - 90% electronically so that means
that the electronic desk is increasingly becoming the
main point of contact.” “I see our electronic Sales
Traders being able to deliver a better service as they
empathise and understand their client’s challenges,
from a high touch perspective, combined with a
specific skillset and knowledge of the low touch
algorithmic trading world.”
We summarised Matthew’s key points as follows:
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Liquidity access with zero market impact. “Barclays
fundamentally differentiate in the way we manage our
central risk business. Our automated “CapComm” model
interacts with algorithmic orders, high touch orders
and flow from our PT desk. We package up the liquidity
we can generate across the floor into a real risk transfer
model so we can recycle liquidity back to our buy-side
clients. For example, we can offer fills to child slices of
the algorithms to interact with the SI central risk book
which is completely anonymous. It builds a position that
the central risk book has no visibility of until after the
parent ticket is complete. The advantages are a) zero
market impact and b) we let the book build so we can
recycle liquidity back through provision of risk and our IOI
platform and other means into a high touch environment.
Our CRB is a passive risk book with an average holding
period of about 6 days where we internalise and recycle
around 70% of our flow. This is very different to other
banks’ risk books that are focused on generating an
individual P&L or alpha. For us, it will create an enhanced
execution experience with incremental liquidity and
improved performance, we aim to benefit from increased
business as a result.”
“Alpha generation is of particular focus where we have
developed ground breaking ways to leverage alpha
signals within the next gen algo platform. Our new
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