Quote of the Week

Automated Trader Magazine

London - 1000GMT, 9 May 2008: "It is the job of the algorithmic providers to educate their eventual users, and it is conversely the job of the buy side to understand the tools that are now available to it. It is not algorithms themselves that are old news, but narrow views of their effectiveness across products that are boring and out-of-date." So says Kevin Partland,senior analyst at Tabb Group, in a paper circulated today.

Kevin Partland's challenging observation is extracted from the fascinating paper 'Algorithms 2.0' circulated by TABB Group today. The paper raises interesting issues around the use of algorithms across asset classes; this is a subject that will be explored in greater depth in our Q3 print edition (pre-order your copy here).

The full quote from which the lines above are taken is as follows. "It is the job of the algorithmic providers to educate their eventual users, and it is onversely the job of the buy side to understand the tools that are now available to it.
Smart order routers, liquidity seeking, delta hedging and numerous other new algorithms have now been designed specifically for the options world. It is not algorithms themselves that are old news, but narrow views of their effectiveness cross products that are boring and out-of-date. TABB Group estimates show that by 2010, nearly 35% of the buy side’s options trading will be done via algorithms. This is up from virtually zero only three years ago."