Traders Magazine spoke with David Mechner, CEO of Pragma, which won Best Algorithmic Solutions Provider at the 2023 Markets Choice Awards.
Please tell us about Pragma and your Multi-Asset Algorithmic Solutions.
Pragma is an independent, quantitative trading technology provider specializing in algorithmic solutions. Co-founded in 2003 by CEO David Mechner, Pragma has a 20-year history of providing its multi-asset class, algorithmic trading platform to the world’s largest banks, brokers, quantitative hedge funds and exchanges. As an independent provider without ties to an ATS or business competing against its clients for a share of the buy-side wallet, or potentially conflicted proprietary trading business, Pragma is unique in the marketplace.
Pragma’s enterprise solution, Pragma360, is a platform that enables banks and brokers to create and support their own custom algorithmic trading service for their institutional and corporate clients and internal traders. Building a competitive algorithmic product in-house requires specialized software, hardware, connectivity, and quantitative capabilities that translate to significant recurring costs and project risk, and which are prohibitive all but the largest global banks and brokers. In contrast, Pragma360 enables its clients to create their own unique, highly customized suite of execution algorithms, including custom order routing and venue integration, at a fraction of the cost without sacrificing execution quality or configurability.
How has your approach to execution evolved over recent years?
Pragma’s approach to execution quality has evolved significantly over the last several years, most dramatically with the introduction of Mercury, a suite of algorithms using deep reinforcement learning to control the details of microtrading, which has reduced shortfall by 33% to 50%. This project began several years ago, when David Mechner, who has a background in computer science and neuroscience, started working with Pragma’s quant team to investigate how machine learning techniques, particularly deep learning, could be used to improve execution quality. In addition to robust improvement in execution quality, the resulting technology provides a continuing pathway for enhancements including the addition of new signals and alternative sources of liquidity.
Pragma also continues to evolve by continually incorporating new venues, order types, and alternative liquidity sources such as single-dealer Indications of Interest platforms, in order to give our clients further customization options to improve the execution results for their customers.
What are recent accomplishments for Pragma?
In addition to Mercury, Pragma recently released a major upgrade to Panorama, Pragma’s Algorithmic Management System. Panorama, now delivered via a web browser, enables clients to dynamically monitor thousands of orders in real-time, using dynamic custom filters, alerts, and execution benchmarks with a speed and responsiveness normally seen only in desktop applications. Panorama also allows users to flexibly navigate across levels – from an aggregate portfolio or basket view all the way down to the details of an individual FIX message – ensuring users have maximum transparency to best support their algorithmic franchise.
Pragma continues to evolve in expanding algorithmic trading into additional asset classes. After launching algorithms for Spot FX and NDF’s several years ago, Pragma has recently expanded its algorithmic services to Fixed Income.
What is the future of algorithmic trading?
For Pragma, the future of applying AI to trading is here, and our future will be one of further application of this technology across markets. Our successful application of deep learning to algorithmic trading is yet another example of the continuing growth in specialized technology and skills – and related investment – required to deliver a competitive algorithmic solution. As a result of this relentlessly rising bar, Pragma believes the trend of outsourcing algorithmic trading to specialist firms will also continue.
Finally, because of the now firmly established benefits of trade automation, we will also see increased adoption of algorithmic trading across asset classes – including those like Fixed Income, which have traditionally used manual workflows.
What can we expect from Pragma in the near future?
Pragma will continue to focus on providing the intelligence that connects traders to the markets by applying advances in technology to execution algorithms and traders’ workflow across asset classes, including fixed income.
