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in such a transaction , so human traders will always do that better than any computer . If you are trying to move a large block , it makes sense to try your hightouch traders first . There are also occasions where a human trader is needed to navigate complex trades with multiple legs , involving derivatives , or with highly specialised requirements .
However , there are instances where a trader is not able to find a contra . One alternative is for the trader to execute the order principally , where the broker takes the other side of the trade . This entails risk of course , and the price will include a premium to compensate for that risk . This is fair , but it ’ s not clear that the result is better than an algorithmic execution . The high-touch handling also incurs a higher commission than an algorithm ( low-touch ).
The remaining choice for the trader is to execute the order on an agency basis . For this , the trader will almost surely use an algorithm as a human cannot check all the trading venues as quickly and comprehensively as a computer can . The trader may add value to that execution by making profitable decisions around when to execute the order and how aggressively . High-level decisions like those are best left to a human trader . They are , of course , very difficult to get right .
Lower-level execution decisions – venue selection , order types , execution rate , tactics – are best left to the algorithm to determine . These decisions , which involve complex trade-offs that often change over the lifetime of the order , are the sweet spot for algorithms . In this age of AI , that should not be a surprise and it seems to be gaining acceptance on
the buyside with its recent trend toward increased automation and electronic execution .
Given the distinct advantages of low- and hightouch trading , some clients would like to leverage both . At BTIG , we offer each client the option of allowing the high-touch trader to see its algorithm orders in case the trader is able to find a contra . For these clients it is the best of both worlds - a highquality algorithmic execution without forgoing the possibility of a natural cross .
On the technology side , where is the focus for BTIG electronic trading at the moment ? We are investing heavily in our technology . Our primary focus is on optimising algorithms for performance . BTIG ’ s algorithms have semiautonomous co-located modules for executing child orders . These constitute the heart of our ability to optimise at the lowest tactical level . For heavy-duty number crunching and analytics , we have a special system component that leverages the Julia programming language , which was created specifically for such tasks .
For our front-office , we have built a data warehouse system that supports analysis , reporting , and research . This system comprises best-in-class tools for data storage , manipulation , and visualisation . Additionally , we have invested in customised tools for real-time monitoring and control .
60 // TheTRADE // Q3 2024