ITG Reverts to Roots, Matches Orders at One Point in Time
November 2, 2012
Investment Technology Group said it plans to give institutional traders a chance to let stock markets settle down after the opening of trading and then execute orders in a wide range of stocks, in one instant.
The execution broker said it will a launch a new “point-in-time” crossing of orders at 9:45 a.m. each day, starging on November 16, two weeks from now.
The POSIT Match will allow institutional traders to avoid the “choppy waters” of the opening of trading at 9:30 a.m. each day, when high-frequency and other automated traders are very active, said J.T. Farley, ITG’s director of corporate communications and investor relations. They can instead try to to execute lists of buy and sell orders for mutual funds and other investment vehicles, when prices are not swinging so widely.
The “point in time” matching of buy and sell orders can avoid the “sloppy game” that occurs in the first 15 minutes of trading and also boost trading in less active stocks that take more time to produce trades that establish effective pricing, in a trading session.
The approach also “goes back to the roots” of the POSIT trading venue, which started as a single “point in time” match of trades and went, afterward, to three such points. That gave way, Farley said, to continuous trading.
“Sometimes, we look to the past to solve the problems of the present,” said Jamie Selway, ITG Managing Director and Head of Liquidity Management. “
With the one-point-in-time matching of orders, institutions can specify the maximum cash exposure they can take, the maximum exposure to a specific stock they can take and other thresholds that must be observed. Matching of orders must follow the priorities a firm sets, Farley said.
This will allow trades to take place, however, that otherwise might have to be skirted. In effect, “netting” of financial exposures takes place automatically by aligning all buy and sell orders at a single point in time.
POSIT Match is available through ITG’s Triton execution management system and also thorugh a Financial Information Exchange connection from other trading systems.