Gain greater confidence in your automated trading decisions during market volatility

In times of volatility, traders need to react quickly to tricky market conditions – and automation is key to this. At times, traders have turned off automated trading routes due to a preference for control during changeable circumstances. But COVID-19 has been a catalyst in shifting this trend.

AiEX, our automated intelligent execution tool, helps clients with trades of all sizes and complexities, providing them with added efficiencies to lower operational risks and transaction costs.

During the early onset of the pandemic, traders were especially busy and had to delegate their time among tasks carefully and automation helped them to achieve this. Now, when the markets become choppy, traders look to adjust their rules to fit the new environment rather than reactively switching off the technology.

We have recently seen the lessons learned from COVID-19 being applied to new challenges such as the Russia-Ukraine war, inflation, and rate hike fears from central banks.

The upshot has been that clients are now exhibiting relative ease with automating during uncertainty, modifying rules to improve flexibility around trade execution and, in turn, still managing transaction costs all while using AiEX’s innovative features.

A finely tuned engine

AiEX empowers participants to create rules suited to high volatility, affording them the ability to plan ahead and ensure execution quality does not fall victim to high-distress situations, and to react intraday if required.

As clients became accustomed to working from home, and as markets normalised, we saw substantive increases in automation, covering all asset classes. This is evidenced by the numbers which saw an uplift in AiEX volumes of €12.9 billion or 58%, when comparing Q1 2022 to Q4 2021 (Source: Tradeweb).

On the credit side we have seen our user interface (UI)-based component help clients manage exceptions, which are more frequently observed in this market. For example, if an insufficient number of quotes are received, the client is notified in the UI and the request-for-quote (RFQ) remains live, rather than allowing it to simply end. This provides a ‘last look’ for clients and an opportunity to execute their trade first time. During volatility, clients can also interact with RFQs on the fly and have the option for extra pre-trade oversight. In practice, this means they can choose which orders to automate and select specific dealers, to give them the element of control they require.

Continuous innovation

Innovation is our lifeblood and we regularly sync up with our clients to design functionality that puts their varying trading styles, objectives and daily challenges front and centre. AiEX caters to a multitude of requirements from differing levels of liquidity, minimal information leakage, to identifying cost saving opportunities and beyond.  And we have the experience to back it up, as we celebrate 10 years of AiEX this year. 

Our tools enable clients to carry out exception handling in both unprecedented and normal circumstances, for complex and standard trades. In Q1 2022 we saw a 26% uplift in the number of European credit AiEX trades completed via our override functionality (described above), illustrating the readiness and adaptiveness of our clients to continue with this methodology during market events (Source: Tradeweb).

In addition, firm streams allow a dealer or electronic market maker to send prices and sizes at which it is willing to both buy and sell. This promotes certainty of execution and an optimised opportunity for price improvement, while also opening up the opportunity to combine click-to-trade executions with the RFQ process.

Finally, our latest technological advance lies in our auto-merging feature so customers can demonstrate adherence to compliance policies and trading on a single price. In turn this helps increase their scope of automation, and increases the use of no touch workflows.