Our free FinTech update also covers Citadel Securities’ acquisition, a Broadridge win, and the DTCC launches a consulting unit.
‘Aiden’ Yields Solution to Cut VWAP Slippage
Securities traders at RBC Capital Markets and scientists who specialize in artificial intelligence (AI) at vendor Borealis AI have been collaborating to deliver Aiden, an AI-based electronic trading platform that exploits “deep reinforcement learning” to facilitate better trading results and insights for clients, officials say.
“In doing so, both organizations undertook one of the biggest challenges in the field of AI today — applying deep reinforcement learning into a constantly changing environment like equities trading, with measurable and explainable results for its users,” according to bank and vendor officials.
“The Aiden platform has shown the ability to navigate the challenges of fluid and dynamic market conditions in real-time, without the need for continuous re-coding like traditional trading algorithms,” according to officials. “Utilizing hundreds of pre-programmed data inputs and its ability to make more than 32 million calculations per order, the Aiden platform is able to execute trading decisions based on live market data, dynamically adjust to new information and learn from each of its previous actions.”
“The market volatility we have seen during COVID-19 has been a great proving ground for Aiden,” says Shary Mudassir, co-head of global equities execution at RBC Capital Markets, in a prepared statement. “Aiden was able to recognize the sudden changes in the market and adapt to them, allowing it to preserve performance.”
Officials add that the first live Aiden solution, a volume-weighted average price (VWAP) algorithm, “was designed to help improve clients’ trading performance by reducing slippage — the difference between the expected price of a trade and the price at which the trade is executed.”
The Aiden VWAP algorithm can “significantly reduce slippage against market VWAP in the U.S. equity market,” says Jas Sandhu, head of equities algorithmic trading, RBC Capital Markets, in a statement. “There are plans to expand the Aiden application to RBC Capital Markets’ full suite of electronic trading algorithms.”
The Aiden platform is available to RBC Capital Markets clients trading in U.S. and Canadian equities, officials add. There are plans to introduce the platform to more clients in other markets over the coming months.
“Aiden is the result of a massive collaborative effort between RBC employees, including traders and AI scientists, and our partners at Borealis AI. Aiden is at the beginning of its journey and we see great potential to further expand its capabilities and redefine execution, while remaining true to its client-centric foundation,” adds
Bobby Grubert, co-head of global equities at RBC Capital Markets, in a prepared statement, in a statement.
Citadel Securities to Acquire DMM Unit from IMC
Electronic market-maker Citadel Securities reports that it has reached a preliminary agreement to acquire rival IMC’s designated market making (DMM) business on the floor of the New York Stock Exchange (NYSE).
The acquisition will “reinforce” the firm’s “position as the largest DMM on the NYSE both by number of securities and by market cap,” Citadel says in a statement.
Citadel Securities has been a DMM on the NYSE since 2016, the firm adds, noting that IMC has been a DMM on the NYSE since 2014, when it acquired Goldman Sachs’ DMM business.
The transaction is expected to close during the fourth quarter of 2020, per the statement. Until the closing, Citadel says, each DMM business will continue to operate independently.
Britannia Global Markets Picks Broadridge
Vendor Broadridge Financial Solutions reports that Britannia Global Markets, a brokerage that is a subsidiary of Britannia Financial Group, has selected Broadridge to “streamline its post-trade processing for its international securities business including cash equities, fixed income and repurchase agreements.”
Broadridge will provide Britannia Global Markets with a “strategic, multi-market” software-as-a-service platform, according to the statement.
“With Broadridge as our partner, we will have a firm foundation for growth as we expand our securities business and deliver continued value to our clients,“ Ian Johnson, CEO of London-headquartered Britannia Global Markets, says in the statement.
DTCC Launches Consulting Services
The Depository Trust & Clearing Corp. (DTCC), a post-trade market infrastructure services provider, reports the launch of DTCC Consulting Services, its new advisory service for post-trade processing.
The new service will offer “client-focused consulting services … including conducting initial infrastructure diagnostics, providing expert insight on their operational model design and on identifying their benchmarks, and helping firms to deliver on their strategy. Subject-matter experts will then be deployed with relevant industry knowledge and expertise to guide firms in the decisions they make throughout the process,” according to the DTCC.
DTCC also notes that it has engaged Quorsus, “providers of specialist consulting services to financial institutions, in support of launching the service.”
The service will initially aid DTCC’s repository and derivatives services and its institutional trade processing businesses, officials say, with a focus “including but not limited to regulatory compliance with Securities Financing Transactions Regulation (SFTR) and Central Securities Depositories Regulation (CSDR) and best practices in the trade reporting and the post-trade process.”
In 2019, DTCC’s subsidiaries processed securities transactions valued at more than U.S. $2.15 quadrillion, DTCC says, adding that its “depository provides custody and asset servicing for securities issues from 170 countries and territories valued at U.S. $63.0 trillion. DTCC’s Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes over 14 billion messages annually.”