One of the big providers of cloud-based order and execution management systems, TORA has announced today the launch of a new AI-based product. The company will be complementing its offering with a product called AlgoWheel. The tool is designed to assist companies to create scalable, systematic best execution processes.
The product comes as a response to Article 27 of the MiFID II directive, which increased the minimum required benchmark for best execution. Since the beginning of the year, companies are required to demonstrate that they have taken “all sufficient steps” to achieve best execution. The new directive has resulted in much more strict requirements when compared to MiFID I.
Quantitative Execution Strategy Optimizer
The product is aimed at the buy-side of the market with the tool which is a quantitative execution strategy optimizer that uses advanced AI technology. Low-touch order execution is automated, while real-time market intelligence is gathered for orders that require human intervention.
AlgoWheel provides a feedback loop that uses historical and real-time order-level execution information to identify the optimal broker-algo and inform the trading decision-making process.
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The historical trade execution information is collected by TORA’s post-trade transaction cost analysis (TCA) solution, while TORA’s AI-driven pre-trade TCA tool is used to evaluate each order.
The pre-trade TCA platform is realized via a convolutional neural network that uses machine learning and over time increases precision estimates as it learns.
The user can either choose to automatically execute the orders via the recommended broker-algo combination located on TORA’s Strategy Server or if a manual operation and confirmation are necessary, the end-user may choose to have the recommended broker-algo displayed directly in TORA’s trading blotter.
Commenting on the development, the Managing Director at TORA, Chris Jenkins, said: “To remain competitive in today’s market, traders need to focus their attention where they can add the most value. To do that, they need an automated trading solution they trust can achieve best execution for the bulk of their orders. We’re confident in our ability to deliver that peace of mind to clients and are excited to include this as part of our best execution solution.”
When using the automated process, the Strategy Server is configurable to enable traders to customize the execution process using any number of data inputs.For example, traders can set a trading strategy to begin at a time of day, when a stock hits a certain price or pending certain overall market conditions. The Strategy server can also be configured to send a certain percentage of orders to different broker-algos to help avoid sample bias.