Global Liquidity Partners, a Red Bank, NJ-based trading brokerage and technology firm, has upped the ante when it comes to electronic trading and is offering the buyside adaptive algorithms.
The firm, located in the trendy and chic town set amid clothing boutiques, upper scale restaurants, a rich nightlife, and high-frequency trading firm Tradeworx, has spent the last several months making improvements to its algorithms, continuing its move away from passive off-the-shelf static trading tools to more adaptive and dynamic strategies.
Chief Executive Officer Tim Lang told MarketsMedia in an interview that over the last six months the firm’s technologists have been tweaking its adaptive algos – namely changing the throttling mechanism and speeds at which the tools execute orders. As Lang explained it, the modifications are now better suited to take advantage of symbol price points.
The throttle mechanism, Lang explained, is triggered by proprietary buy/sell signals, which take advantage of price swings by either increasing or decreasing (throttling up or down) the speed in which child orders are sent in a given time slice. The algo’s instruction is never over-ridden, but the strategy operates using the same thought processes as a trader would, he added.
“Our VWAP and TWAP algorithms are adaptive to price and price changes,” Lang said in an interview. “This is the next stage of algorithm development and that’s our philosophy. By our own measurements, our next generation algorithms have an improved performance rate of 2 basis points.”
He added that part of GLP’s philosophy is to automate common sense into its algos. GLP, through its algorithms and smart order routing technology, sources liquidity itself by routing orders to venues and other trading destinations by carefully measuring venue or counterparty toxicity. This allows GLP to prioritize order flow away from venues that are more toxic.
And in order to protect itself and traders, the firm manages several redundant network and hardware co-located market centers to ensure seamless.
GLP sends orders to all exchanges, dark pools, ECNs and other broker dealers. The platform get the fastest data feeds – with real-time data coming directly from exchange providers’ raw data protocols – no third party providers.
“At the end of the day, we cannot eradicate all latency along the way from order entry to actual execution,” Lang said candidly. “”We adapt and keep pace with technology so our clients stay on a level playing field.”
The firm was founded in 2010 by Lang himself. With more than 25 years in trading, he has been a managing director at Spear Leeds & Kellogg, overseeing off-floor trading functions. Lang has also worked at Sherwood Securities where he was head of listed trading, building its trading desk and overseeing the internalization of order flow from national Discount Brokers. Most recently, he served at Credit Suisse’s Swiss American Securities subsidiary and was head of internalized trading, and served to advise the bulge firm on market structure.
GLP touts itself as the solution to combat HFT and their strategies, offering the buy and sell-side a custom-made, low-latency, broker-neutral, co-located trading system designed at the outset to execute just as efficiently as HFT and eliminate their oft-talked about speed advantage. The firm took its time building out, opening for business in 2011.
“The fragmented trading markets created opportunities for predatory trading both from certain HFT players and market makers,” Lang said. “We believe the problem is solved with our model that seeks liquidity and minimizes information leakage on an advanced technology platform.”
First, its trading platform is built on a C++ event engine, providing traders with super-high output and throughput of messaging and processing power. The event engine, designed in-house, enables users to manage their central order book, execute across various algorithms and monitor the functioning of its smart order router.
Second, it uses what Lang terms “A Net Trading Model” that focuses on best execution and can be customized and adapted right in-house. This model, according to Lang, takes multiple variables into consideration -, market center latency rates, trade velocity, market center fulfillment rates, average fill size, order execution time and client benchmarks. GLP also offers an agency model to clients that indicate that preference.
Also, acknowledging the need for adaptability and providing the buyside with as much flexibility as it can, GLP can connect to most order management system vendors’ systems directly or via FIX protocol.
With this recent technology buildout, GLP now has turned its focus from landing the brokers to getting buyside traders hooked up to its trading platform.
“We’ve also begun discussions with several buy side firms who are interested in our trading platform,” Lang said. “We have a handful of institutions already using the system and there are more than a dozen new firms in our pipeline. And we have more meetings with more buyside desks scheduled.”
As for the brokers, the firm is connected to upwards of 70 firms – up from 60 six months ago.
“All this ties into our technology-driven broker-neutral approach,” Lang said.
