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ITG survey: Reinventing Algos

First Published 13th March 2017

ITG survey finds buyside traders seeking custom features and increased transparency.

Ben Polidore, ITG

Ben Polidore, ITG

New York - ITG, the independent broker and financial technology provider, has released a survey of North American institutional investors' views of algorithmic trading. The poll follows on a survey released by industry consultants Greenwich Associates in January 2017, which found that only 7% of buy-side traders are fully satisfied with the standard algos provided by their brokers. (1)

The ITG survey, conducted in early March, polled buyside professionals who participated in an ITG webinar on reinventing algos. The nearly 70 respondents represent institutional investors with assets under management (AUM) ranging from approximately $130 million to $1.8 trillion, with median AUM of $14 billion.

Survey Findings:

  • Custom Flow: While most buyside traders prefer customized algos to off-the-shelf versions, only 24% send more than half of their daily order flow to custom algos.
  • Strategy Improvements: The traders polled would like to see improvements in more complex algo strategies such as implementation-shortfall (IS) algos (60%) and liquidity-seeking algos (24%). Traders saw less need to change VWAP algos and Close algos (10% and 6%, respectively).
  • Reinventing Algos: Buyside traders would like to see several improvements to the algos offered today. 73% would like to see more outcome-focused reporting, with details on information leakage. 61% call for increased algo transparency and easier-to-understand strategies. 39% want to see algos which adjust based on a trader's execution history and investment style.

Commenting on the survey findings, Ben Polidore, ITG's Managing Director for Algo Product Management, said "We support a healthier market for algos where brokers compete on performance. We are making key investments in our algos, with a recent focus on our IS algo which we're updating later this year, and these survey results validate that strategy."

(1) Control and Transparency: How the Buy Side Seeks to Manage Their Broker Network. Greenwich Associates, January 2017

Please visit www.itg.com for more information.

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