SunGard’s Fox River on Monday launched a “dollar certain” algorithm for traders who want to execute in dollars rather than in shares.
The algo helps eliminate manual management of trades when firms know they want to execute a certain amount in dollars rather than in a certain number of shares. That in turn helps avoid calculation errors and reduces operational risk, the company said.
Currently, traders who wish to trade a dollar amount must manually convert the figure into a specific number of shares and then enter that number into their trading systems. The Fox River algo automates that process.
Paul Daley, head of product development at Fox River, said one of the firm’s customers approached it about the idea, and once the firm developed the algo, others wanted to use it as well.
“The quickest way to be relevant is to listen to your customers when they tell you things,” Daley said. “We went out and built it for these guys, and very quickly found that they were not the only ones facing this problem.”
Though the system is based on a simple idea, Daley said the engineering was a little tricky, because nearly everything in equities is geared toward trading in terms of shares. The dollar certain algo is able to make that conversion, and is offered as an overlay to Fox River’s other algos. That way, traders can execute in dollars regardless of which other algorithmic strategies they are using.
Daley said the product appeals mainly to the buyside, including mutual funds and bank trust departments, both of which take orders in dollar terms. It can also be used when companies perform corporate buybacks, which are typically authorized in dollar rather than share amounts.
