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Buy-Side Automation Of Trade Orders Rises

Metori Capital Management’s selection of QuantHouse’s QuantFACTORY algorithmic trading development framework represents the beginning of buy-side firms automating trade order execution based on a portfolio manager’s conceived strategy, according to Stephane Leroy, business co-founder and chief revenue officer of QuantHouse.

While sell-side firms have already had automated trade execution based on pre-set strategies in place for years, the complexity of implementing such technology has made buy-side adoption slower, according to Leroy.

“The buy side is slowly moving from monitoring assets with human traders to monitoring assets in the portfolio through automated technologies,” he says. “It’s much more complex to design and provide a technology that deals with ‘what and why,’ rather than ‘when and how.’”

Metori Capital was spun off from Lyxor Asset Management in January to manage its Epsilon funds, which are valued at about 400 million euros.

“This shows that this kind of big firm now realizes that the assets they manage today can, going forward, also be managed by automated processes,” says Leroy. “It’s a bigger win for the industry in the sense that I’m sure others will follow. Portfolio management won’t only be handled by human traders with human capabilities and most of the time, with very limited technical skills or tools. It’s a quantum leap toward a new type of technology.”

Alone, a portfolio manager with a good idea may only be able to see a couple screens and devote eight-hour workdays to pursuing that idea. “The moment you keep those ideas, which are excellent, and have that manager — with the help of developers and experts — compile those into a technology like QuantFACTORY, then the manager doesn’t have any limits anymore,” says Leroy.

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