Research firm Elkins/McSherry’s eleventh annual survey of global transaction costs, released Monday, concluded that institutional traders receive the best prices among block alternative trading systems (ATS) using Pipeline Trading Systems, a registered broker-dealer and operator of Pipeline, an ATS which enables institutions and brokerage firms to trade large blocks of NYSE-, AMEX- and NASDAQ-listed issues and exchange traded funds (ETFs).
Elkins/McSherry analysed NYSE-listed results from 1,100 money managers at 1,900 brokerages and ATSs worldwide to determine which firms do the best job of minimising costs. Comparing all brokers and ATSs to the volume-weighted average price (VWAP) benchmark, Pipeline's performance was found to be 11.7 basis points better than average, the best among block trading ATSs.
"When predators take advantage of a large institutional order, the result is poor price performance compared to contemporaneous tape prints," says Fred Federspiel, president, Pipeline. "This report validates the Pipeline community's approach to 'predator-proofing' block trading. Pipeline clients minimise information leakage, and the inevitable price manipulation that results," he comments.
The Elkins/McSherry study reports on trader success prior to Pipeline's launch of the algorithm switching engine. The switching engine uses 'predictive' technology to execute client orders, even in the absence of giant natural liquidity, and with minimum information leakage and the corresponding minimum slippage against arrival price, according to the firm.