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conversation
In with …
Stuart Lawrence
Stuart Lawrence , head of UK equity trading at The TRADE ’ s 2022 winner of Trading Desk of the Year , UBS Asset Management , deep dives into navigating current market conditions and the shifting regulatory and market structure landscape with ANNABEL SMITH .
our decision-making processes . From the active side , we ’ re definitely finding there ' s a lot less natural business to interact with and instead we are using more risk , which isn ’ t always our preference . The larger banks can offer this through their CRBs but the smaller brokers often don ' t have the balance sheets to do so . Therefore , the big banks are dominating and are consolidating their positions . That said , we are seeing some of the smaller firms innovating more than their larger rivals and this product improvement keeps them competitive . Also , as with our peers , we are continuing to use algorithms more as a percentage of our overall business , fuelled by the use of our algo wheels .
What is your technology strategy ? Two years ago , we instigated an algo wheel and after that we began the process of automation . We built on our algo wheel infrastructure and created desks from which certain types of order flow would be automated . We call it “ no touch ”. The portfolio manager sends trades to the automation desk , which then sends them on to our EMS , where they are executed in a timely fashion based on the parameters we ' ve set in the algo wheel . The only thing we need is one person on the desk to have eyes for kick outs in case anything hasn ' t correctly submitted due to prescribed characteristics . We started small with certain types of flow and as we go on we ’ re bolting on more and more . In terms of notional traded it ’ s a hugely growing part of our activity . Ultimately , though it is difficult to give an arbitrary number in terms of the number of orders automated , I ’ m aiming for 60 %+, maybe even as high as 80 %. Most of that will be made up from the passive side of the business . In terms of overall notional traded it will probably be less than that , by percent , because we will tend to execute the higher value orders ourselves using the experience of the trading team . The advantage of automation in my opinion is that it clears the “ white noise ” of lownotional orders where we can add no value so we can focus on those where we can .
As a step further on from that , we ’ re working on clustering . Clustering is about looking at the characteristics of each individual stock in a more data-driven way . A stock could , for example , have certain momentum or volatility characteristics that can be observed . Each stock can be assigned to a group ( or cluster ) and that group can be traded in a way relevant to their
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