When evaluating the trade process, the brokers and now independent vendors are carefully helping the buy side dissect each piece to see where the best value, highest alpha and least amount of risk lay. It has undergone significant change in the last several years. But one thing remains – the importance of performing a thorough pre-trade examination.
“Pre-trade checks, as always, are about understanding all the dynamics at play that drive price discovery for any given order, including liquidity characteristics of the instrument itself and similar influences at the sector and market level,” said Frank Freitas, Pluribus Labs CEO and formerly Global COO at Instinet. “The scope of information that goes into this understanding has increased steadily with time.”
Pluribus distills powerful predictive analytics from a variety of unstructured data sources. According to the firm, “their solutions add significant value to a variety of portfolio management and trading workflows.”
As an example, in Pluribus’ own research, the firm sees real and systematic intraday linkages between conversations about securities on social platforms and trading behavior of those securities.” Back in 2005, social media was in its infancy and with the trading world largely ignoring the medium and platforms when it came to discussing trade ideas or companies. As a matter of fact, Twitter, one of the biggest social media platforms and is in heavy use by traders, wasn’t founded until March 2006.
“The challenge is to consume these disparate sources in a streamlined workflow that enables strategy selection and order entry in a timely, efficient manner,” Freitas said.
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