Foreign exchange trading platform 360T and execution algorithms and analytics provider Quantitative Brokers have collaborated to launch a new set of FX algos.
The algos will be powered by Quantitative Brokers and made available via 360T’s trading platform across both disclosed and anonymous liquidity pools.
David Kalita & Matt O’Hara
Launched on Monday, the new offering features newly FX-optimised versions of Quantitative Brokers’ flagship algorithms Strobe FX – for schedule-based execution for TWAP and VWAP benchmarks – and Bolt FX – which is an implementation shortfall algorithm built to minimise execution costs relative to arrival price.
The algos have been tailored to FX microstructures that traders have to navigate day to day, David Kalita, chief executive officer at Quantitative Brokers, tells The TRADE.
“Traders are dealing disclosed with market makers that know who they are and therefore are constantly assessing their profitability and monitoring how they’re able to monetise the flow,” he explains.
“A common mistake that we’ve seen other people make in this space is thinking they can achieve great transaction costs on one trade by being really aggressive but then LPs [liquidity providers] widen out their pricing and tomorrow that price is no longer available.”
He explains that the new algorithmic offering launched today has a codified workflow that attempts to find a middle ground that supports both parties involved in a trade.
“We’re trying to find the happy medium where our LPs are being properly treated and getting reasonable flow that they can monetise at a healthy level and we’re still being able to achieve good transaction costs on any particular trade,” he says. “Finding that long run equilibrium between the two so you’re not sweeping across multiple LPs and you’re not being hyper aggressive is essential.”
In the coming months, Kalita confirms that two additional algos will also be launched to complete the suite. One targets the benchmark prices at the close, named Closer, and a more aggressive algo which is meant for more people that want to get done in 10-15 seconds, named Octane.
When asked why the pair had chosen now to launch their suite, the answer was simple: client demand.
“There has been growing demand for alternative algo solutions in the foreign exchange market particularly provided by independent third party providers who offer algo execution logic that points to various different curated pools of liquidity,” chief executive of 360T Americas, Matt O’Hara, tells The TRADE.
The executives explain that the pairing of Quantitative Brokers and 360T makes sense for several reasons. 360T has connections to many of the key non-bank market makers.
It also claims to offer unique data available in spot and in swaps around historical market pricing.
“That’s been very useful for us to assess not only our strategies but also use in our algo logic to make sure we’re executing good prices in a non-toxic manner,” says Kalita.
Deutsche Börse
360T and Quantitative Brokers are both owned by Deutsche Börse, acquired 10 and six years ago respectively.
“It is a great construct because we have the backing of the group which has fantastic brand reputation scale distribution but the group companies can retain their DNA, culture, be very customer centric, very innovative very entrepreneurial,” adds O’Hara.
360T has undertaken several other partnerships under the Deutsche Börse umbrella, O’Hara explains.
“360T partnered with Eurex to deliver FX futures through 360T’s distribution networks. 360T also produced some unique market data content sets focused on support swaps and forwards that are available through the Deutsche Börse market data services business,” he says.
The algorithms launched today were created and are powered by Quantitative Brokers.
There is scope for Quantitative Brokers to explore partnerships with other platforms in the future, Kalita confirms.
“Of course, QB has other clients and they potentially use other providers and so we’ll evaluate that as a needs must basis but right now this is available on 360T and we think that the product is going to be really strong particularly with this partnership,” he concludes.