Broker Crédit Agricole Cheuvreux has expanded its pairs trading capability with the introduction of new algorithms for the North American market. According to the bank, the new strategies allow clients to achieve optimal execution when taking advantage of merger and statistical arbitrage opportunities.
Cheuvreux’s North American algorithmic suite now includes a strategy that combines a mixture of in-house-developed methodology and outsourced solutions. The algos enable a full-service pairs execution desk to trade risk/merger arbitrage pairs and participate in statistical arbitrage and long/short market neutral trading on a low-latency, automated basis. The algorithms can maintain a share ratio or be cash neutral in their execution methodology.
The strategy includes numerous trading methodologies and pricing models including ‘outperform’ (a tolerance on a price differential from a benchmark), spread, ratio, inverse ratio, premium/discount and annualised premium.
“CA Cheuvreux’s pairs trading strategies are fully integrated within our North American high-touch offering, which allows our clients to benefit from our local trading expertise and best execution capabilities,” said Ian Peacock, global head of execution services at CA Cheuvreux, in a statement. “Our pairs trading solution offers low latency and is capable of intelligently accessing over 60 trading destinations, including dark pools, to ensure best execution.”
CA Cheuvreux’s algorithms are capable of being aggressive, passive and working on both sides of the spread as well as when in-line on the hit/lift level to improve execution. The medium-touch pairs offering is fully integrated with CA Cheuvreux’s DMA, algorithmic trading, global program trading and traditional sales trading services.