Agency broker ITG has added an overlay to its Hedge Pro algorithmic strategy which lets users better manage portfolio risk.
The enhancement, known as Switch Trade, allows traders to maintain dollar neutrality when executing a pairs trade. Portfolios are considered dollar-neutral when the sum of long and short positions equals zero.
According to ITG, Switch Trade offers execution tactics to help participants define the sequence and urgency level of their trades.
“Switch Trade allows traders to efficiently exchange one position for another by contemporaneously managing cash and minimising leg risk,” said Jeff Bacidore, head of algorithms at ITG. “ITG Hedge Pro Algorithm with Switch Trade provides a powerful tool to achieve best execution for institutional investors confronted with this challenge.”
The Hedge Pro strategy and Switch Trade is available in the US and Canada, and was recently introduced for markets in Brazil and Mexico.
All ITG algos are available through the broker’s Triton execution management system and via third-party trading systems.