Algo Trading Lures the Buy Side in a Fragmented Market

摘要

As it becomes harder to trade large blocks of stocks in U.S. equities without tipping their hands, buy-side firms are turning to algorithmic trading — a computerized strategy that carves up their orders into smaller pieces to conceal their executions. "The logical response by the buy side has been to kind of slice and dice all of their orders into much smaller pieces so that you don't leave any footprints," says John Wheeler, vice president and director of U.S. equity trading at American Century. He notes that this is important so that trades do not move the market. If American Century gives a floor broker 50,000 shares to represent its order on the New York Stock Exchange floor, the order is subject to price improvement and can be broken up by the specialist and other buyers on the floor, Wheeler says. So Wheeler feeds part of American Century's large orders into algorithmic trading strategies — proprietary models that reside on the sell side's computers.