EdgeTrade, an agency-only broker and developer of algorithmic and direct market access (DMA) software, says FAN, its smart order execution strategy, has outperfomed industry estimates for sourcing liquidity.
FAN was launched in September 2006. It sources liquidity from aggregated dark pools and public markets simultaneously.
Research and advisory firm TABB Group has estimated a 9% average match rate for orders across non-quoting venues, and maintains that dark pools and crossing networks have grabbed nearly 10% of the total equity market, a figure projected to reach 15% by 2010. FAN, in contrast, saw a 28.9 average daily (year-to-date) percentage of executions in the dark, with peak days hitting as much as 66%.
“FAN’s singular differentiation in the industry and results are crystal clear,” says EdgeTrade CEO Joseph Wald. “Traders have a far better chance of increasing fill probability by leveraging smart order execution logic that fans orders out to multiple destinations, dark and public, in search of a match and best execution.”
Wald believes that smart order execution will supersede smart order routing in the quest for liquidity.
“FAN is performing extremely well for two key reasons: it’s a robust aggregation system with an adaptive ability to continuously pinpoint where real time executions are occurring in the marketplace and change course in a microsecond,” he says. “This proactive, dynamic hunt for liquidity – simultaneously scanning leading dark pools and public markets using historical and proprietary analytics – proves FAN’s value proposition: smart order execution, a term coined by EdgeTrade in 2005, is the successor to smart order routing for optimally sourcing liquidity and best execution in today’s fragmented marketplace.”
The company believes that without dark books as destinations, smart order routing’s linear, passive approach means a less-than-likely potential fill rate, inferior execution and higher trade costs.