TORA has introduced an AI-powered AlgoWheel designed to help firms create scalable and systematic best execution processes in line with the requirements of Markets in Financial Instruments Directive II (MiFID II).
The TORA AlgoWheel is a quantitative execution strategy optimiser that uses AI technology to automate low-touch order execution or provide real-time market intelligence for orders needing human intervention. It 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 transaction cost analysis (TCA) solution, while the company’s AI-driven pre-trade TCA tool is used to evaluate each order. The pre-trade TCA platform is built on a convolutional neural network that uses machine learning to increase its estimation precision over time.
Low-touch orders can be automatically executed by TORA’s Strategy Server using the recommended broker algo combination. Alternatively, the recommended broker algo can be displayed directly in the TORA trading blotter for orders where a trader wants to be involved.
When using the automated process, the Strategy Server is configurable to enable traders to customise 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 server can also be configured to send a certain percentage of orders to different broker algos to help avoid sample bias.
Chris Jenkins, managing director at TORA, says: “To remain competitive in today’s market, traders need to focus their attention where they can add most value. To do that, they need an automated trading solution they trust can achieve best execution for the bulk of their orders.”