Ever since Michael Lewis’ “Flash Boys” claimed that high-frequency trading firms “game the system,” brokers have seen an opportunity. Nearly every other week someone from the sellside unveils a new algorithm that seeks liquidity while boosting transparency and hunting for HFT predators that lurk in dark pools.
The HFT firms insist that they are bringing much-needed liquidity to the market but brokers have used this to address the concerns – and stoke the fears – of the buyside who think that dark pools are rife with predators waiting to pick them off when they execute a trade.
Enter the new breed of algos. The mission of these formulas is clear: Your trades are safe with us and we will help you get ahead of the competition.
In this Traders gallery“Inside New Algos: Hunting HFT Predators, Finding Liquidity and Boosting Transparency,” we look at the past year’s worth of Algo Update subjects and their new formulas. Each month, managing editor John D’Antona Jr. profiled a new offering from the sellside in the battle for transparency.
And there is no end in sight for broker algos that will give the buyside any advantage they desire.
