Next Generation Trading Algos

While computer-based trading technology dates back to the early 1970s, trading technology and infrastructure has undergone many tactical and strategic revisions. Today algorithms and responsible for executing a little less than half of US institutional equity buy-side trading volume. Given the compositeness of this market, brokers are again re-investing in their infrastructure and leveraging new technologies and data science to make their trading algorithms better, more efficient and more effective as they begin to launch the latest version of next-generation algorithms. These new and upgraded trading models are being developed to meet stricter performance metrics and benchmark standards as algorithmic trading is now poised to make a great leap forward in complexity and sophistication. In addition, trading algorithms are increasingly customizable which enable these newer algorithms in conjunction with high-frequency trading capabilities, advanced communications and more sophisticated analytics to obtain almost individually defined execution strategies.

This TABB Group note looks at the latest generation of trading algorithms and how brokers are increasingly employing new services to make their algorithms more efficient and effective.