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Trading technology solutions provider TradAir has announced the roll out of enhanced Full-Amount execution logic, further improving upon its existing Full Amount execution performance.
TradAir’s FX technology platform enables banks and brokers to intelligently aggregate the best relationship and anonymous liquidity from the industry’s top liquidity providers (LPs), including global and regional banks, leading non-banks and top ECNs. Algorithmic Smart Order Routing (SOR) logic executes orders against the best prices from aggregated streams of sweepable or full amount liquidity.
With Full Amount pricing, liquidity providers agree ‘relationship based liquidity agreements’ with their price taking bank and broker clients, whereby the LPs agree to price the Full Amount of an order (up to agreed maximum size), on the understanding that the entire order will be executed with the one LP that provides the best price for the full order amount.
TradAir’s platform provides Full Amount pricing from many LPs in sizes up to $100m, ensuring superior execution quality for large size orders, which are executed with a single LP in one trade, with near zero slippage due to market impact.
Ayal Jedeikin, TradAir acting CEO commented that:
Execution performance is critical to our clients and their customers, by providing direct relationship based liquidity to our clients and optimizing the execution between sweepable and full amount liquidity we can provide clients the controls to optimize their fill ratio based on their own trading flows and styles.
Analysis of order flows found that fill ratios varied depending on client type, order size and currency pair. There proved different thresholds above which Full Amount execution delivered superior fill-ratios to sweepable streams, varying by client and currency pair.
With this analysis in mind, TradAir has enhanced existing Full Amount execution logic, providing clients with greater control over how their orders are executed.
The new ‘User-defined’ Full Amount Execution Logic delivers improved fill-ratios and greater execution control, enabling clients to:
- Define order size above which execution is against best price from single Full Amount LP
- Define order size below which execution is against best prices from sweepable LPs
- Automatically execute at best price from sweepable LPs or single Full Amount LP
Using the analysis of trading flows, firms are now able to set their own threshold order sizes for Full Amount Execution, improving fill-ratios and optimizing execution performance, ensuring end-user clients continue to benefit from an outstanding trading experience.
Full Amount pricing benefits both the client who receives certainty of execution for their complete order, and the LP who will be more willing to quote in the full size of the order, as it will be filled against just one LP, with no information leakage, enabling the winning LP to more effectively risk manage the resulting position.
By contrast, when large trades are executed against sweepable streams, LPs tend to price more defensively, as they don’t know the full amount of the original order. The market impact of the original order can be magnified when executed against multiple sweepable LP streams, as it ripples through the wider market, resulting in adverse movement in the price as more participants are aware of the order and start to hedge their positions.