Iris is opening up a new frontier in electronic trading – that’s the mantra and execution tool of agency-only broker dealer Clearpool and chief executive Joe Wald.
Wald, formerly of GAIN Capital and Knight Capital Group (now operating as a reorganized KCG Holdings,) has announced his firm’s launch and deployment of Iris, a technology designed to transform how orders are handled electronically to improve liquidity interaction and fill rates. Simply put, Iris aggregates orders to elevate their prioritization in a venue’s execution queue, giving traders executing orders via its Clearpool Execution Services unit, the opportunity to derive a better quality print.
As Wald sees it, Clearpool and Iris is a new generation trading software development and execution business.
“Iris is a clear reflection of how we see the changing landscape in equity trading,” said Wald. “This technology enables firms to compete head-to-head with market participants who have for too long dominated electronic trading.”
And Wald knows electronic trading. He joined Clearpool from GAIN Capital where as executive vice president he ran GTX, the firm’s institutional electronic FX trading business. Earlier, Wald was a managing director and head of Knight Direct, Knight Capital Group’s institutional electronic trade execution business. Before Knight Capital, Wald was CEO and co-founder of EdgeTrade Inc., the pioneer developer of agency-only, liquidity seeking algorithms.
All traders routing orders through Clearpool Execution Services will automatically have their order placement guided by Iris to improve handling in both price/time and price/size venues, with cancel/replace orders and in sourcing block liquidity in dark venues.
How does Iris improves order handling on a price/time basis? As Wald explained, child orders are routed to a venue are decoupled from the parent. When a customer cancels an order, Iris will in turn cancel or reduce the order with the lowest queue priority. This automatic response effectively enhances the queue priority of all other Iris orders. Without Iris, a queue position is lost when better positioned orders are cancelled.
How?
Iris is programmed to know all rules for how each market center handles cancel and replace requests. For example, If a customer increases the size of an order that would, in turn, cause the order to lose its priority Iris will split the order in two, keeping the priority of the earlier order. Without Iris, cancel/replaces are managed as is and can result in loss of position.
“Aggregating interest across customers allows Iris to use our scale to optimize queue position,” Wald said. “Larger orders provide for a better position. Without Iris, child orders are worked independently with each assigned a lower queue priority.”
Also, Iris aggregates orders in dark pools that have minimum size order types and requirements, which enables traders to find the largest block liquidity that may otherwise be unattainable depending on the size of their order. Iris will also aggregate orders in dark pools in order to take advantage of the conditional order types available in these venues. In both instances, Iris exposes orders to more block liquidity through its aggregation techniques.
“The software and tools we’re developing from scratch,” said Ray Ross, Clearpool executive vice president & CTO, “are for traders looking to compete in an equity market that is undergoing substantial changes and where the technology of yesterday simply won’t keep them in the lead.”
Founded in 2012 and based in New York, Clearpool is a trading software and execution firm focusing on evolving equity market microstructure and the trading lanscape. The firm’s two business areas encompass Clearpool Execution Services, an independent agency broker-dealer, and Clearpool Technologies, developer of state-of-the-art electronic trading, routing, compliance and risk solutions.Clearpool clients are active and proprietary trading firms, broker-dealers, clearing firms and hedge funds.
Wald was appointed chief executive of Clearpool Group in May 2014.
