KCG Europe launches Catch algo in bid to grow institutional business

Catch liquidity seeking algo aims to take strengths of market making business and offer them to buy-side clients.

KCG has launched an algorithm for European clients that utilises strategies from its market making business to seek out liquidity.

The algo launch forms part of KCG’s strategy to expand its client execution business and attract more key institutional investors to use its service.

KCG says its algorithm, called Catch, is flexible and able to use smart logic and advanced analytics to achieve better execution.

“Catch uses our nuanced fair value models, analytics, processing power and optimised routing logic to expertly navigate the EU marketplace,” said Rob Crane, head of execution services for KCG Europe.

He told The Trade that Catch is able to anticipate when shares are beginning to slide and can adjust passive orders downwards in advance to get improved prices, and can perform similarly on the aggressive side.

Crane added that the company’s use of microwaves as part of its order routing meant it could also help to reduce opportunity cost when delaying orders between different markets to ensure they hit simultaneously by halving the time taken to send orders to venues across Europe.

Catch has already been available in the US market and KCG said it has proven popular with clients there.

In Europe KCG is working on expanding its institutional client base as Mifid II begins to be implemented. Crane said the firms has a number of initiatives currently underway to address this strategy.

“Since January we’ve been taking anything we cross in our substantial retail business and have been putting it into our institutional liquidity pools, which has been very successful. Retail flow is, for the most part, no-toxic and it tends to move in the opposite direction to institutional flow, so there’s a natural match there that clients can take advantage of,” Crane said.

The firm is also looking to launch a “next gen VWAP strategy” in the coming months, which wlll utilise underlying passive and aggressive strategies to give improved execution performance.