Product Type: Market Research Report
Published by: TowerGroup
Published: September 2004
Product Code: R301-1016Description This TowerGroup Research Note discusses providers of equity quantitative trading solutions to buy-side clients as well as some of the ways that broker providers of quantitative solutions are using those solutions to support their own trading requirements. The Note also discusses the growing trend toward integrating algorithms to support the derivatives businesses of brokerage firms. This trend is most apparent in the equity derivatives markets, where the arbitrage strategies and pairs trading of hedge funds seek to use the derivative and the underlying security interchangeably. Although this marketplace is less mature, TowerGroup sees it as the next frontier for broker-provided algorithms. The nonequity market for quantitative trading will be covered in subsequent TowerGroup research as this market and its offerings mature.Table of Contents - TowerGroup Take-Aways
- Report Coverage
- Introduction
- Terminology
- Exhibit 1: Segmentation of Algorithmic and Arbitrage/Strategy Trading Providers or Enablers (2004)
- Broker as Quantitative Trading Solution Provider
- How Does Algorithmic Trading Work?
- Do Broker-Provided Algorithmic Models Differ?
- Why Offer the Advantage of Algorithms to the Buy Side?
- How Will Brokers Compete?
- Bundling of Pre- and Post-Trade Cost Estimation and Analysis
- Brokers Providing Algorithms or Trading Platforms
- Bank of America
- Credit Suisse First Boston
- Goldman Sachs
- Instinet
- ITG
- Merrill Lynch
- Morgan Stanley
- Other Players in This Market
- Exhibit 2: Market Share of Buy-Side US Equity Algorithmic Trading Provided by Brokers (Shares Traded, 2004)
- Third-Party Software/Service Solutions
- Order Management Systems
- Summary
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