TORA, provider of a cloud-based order and execution management system (OEMS), has announced the launch of its AI-powered AlgoWheel, which will help firms create scalable, systematic best execution processes.
Article 27 of the MiFID II directive raised the minimum required benchmark for best execution. Firms are mandated to demonstrate they have taken “all sufficient steps” to achieve best execution – a far stricter application than under MiFID I. TORA’s new AlgoWheel, available globally, can help buy-side firms quickly achieve this goal.
TORA’s AlgoWheel is a quantitative execution strategy optimizer that uses advanced AI technology to automate low-touch order execution or provide real-time market intelligence for orders needing human intervention. This solution 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.
Historical trade execution information is captured by TORA’s post-trade TCA solution while TORA’s AI-driven pre-trade TCA tool is used to evaluate each order. This pre-trade TCA platform is built upon a convolutional neural network that uses machine learning to increase its estimation precision over time. Low touch orders may be automatically executed using the recommended broker algo combination by TORA’s Strategy Server to create a highly scalable trading operation. Alternatively, the recommended broker algo can be displayed directly in TORA’s trading blotter for those orders where a trader wants to be involved.
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.
Commenting on the development, Chris Jenkins, Managing Director at TORA 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.”