Buy-side firm Ignis Asset Management has selected smart order routers (SORs) from five brokers for the first phase of its SOR implementation following an extensive provider review, according to Betsy Anderson, the company’s head of centralised dealing.
Ignis plans to implement routers from Merrill Lynch, UBS, Instinet and ITG globally, as well as Macquarie for trading in Asia, by Q2 this year. “We will review those post implementation and look to add additional brokers at the phase two stage,” Anderson told theTRADEnews.com.
The challenging trading conditions that have prevailed since last September highlighted the value of smart order routing to the firm. “Trying to find liquidity has become increasingly difficult and there is less of an appetite for risk,” said Anderson. “Those two trends combined have increased our need to use smart order routing and more sophisticated algorithms.”
Anderson said a key consideration for Ignis when choosing smart order routers was the ability to actively seek liquidity, rather than simply post orders at trading venues, and dynamically shift orders to new venues. “The crucial thing for us with the selection process was not the number, type or complexity of the venues the routers connected to but their speed and efficiency of seeking out and hitting liquidity, regardless of its location or nature.”
Ignis hopes that the capabilities of the routers it has chosen will make the firm less reliant on brokers’ balance sheets for difficult trades. “Our need for risk capital commitment will diminish as our ability to seek out that liquidity increases,” said Anderson. “Hopefully our current concerns about hard-to-find liquidity and less capital commitment will be addressed through the implementation of smart order routing.”