TORA, an agency broker and technology vendor for Asian markets, has expanded its smart order routing (SOR) solution to Hong Kong in anticipation of greater fragmentation of liquidity in the region.
As well as the ability to track liquidity across a number of off-exchange trading venues, TORA’s SOR – known as TSOR – also includes options to help buy-side traders tailor the solution to their specific trading parameters and strategies. TSOR is connected to 12 broker-owned and third-party pools across Hong Kong and Japan.
“The buy-side trader welcomes tools like TSOR which provide efficiencies in finding liquidity and help to execute orders at their target price, or better, as liquidity fragments across Asia,” says Chris Jenkins, managing director at TORA.
Although the Hong Kong government’s Competition Bill prevents any alternative trading venues from directly competing with domestic exchange group Hong Kong Exchanges and Clearing, a number of brokers, including Citi, Deutsche Bank and Nomura have set up broker crossing engines, which are allowed to offer secondary trading in Hong Kong.
TSOR is based on a proprietary algorithm that anonymously and simultaneously searches multiple broker internalisation pools with a broad set of flexible parameters to help the buy-side achieve best execution. This includes toxicity-based logic that directs flow to specific pools and posts certain order types to achieve the best result for an order. Traders can also set thresholds for crossing at a minimum order size or level of price improvement, or overlay algorithmic strategies with TSOR to support their trading strategy.
“Clients who trade Hong Kong will certainly see benefit in adopting TSOR into their workflow as a tool to source liquidity from a single point of access, whether it is via TORA Compass or any execution management system,” added Jenkins. “We expect scale to build quickly as it has in Japan, where TSOR delivers clients an average price improvement of 11 basis points.”