New Product Features

In the ‘new world’ under MIFID II data will be King. Voluminous, quality data. For trading desks, the winners will be those who use technology to process the data by delivering actionable and informative insight throughout the entire trade cycle to validate their best execution processes. At OTAS, our edge is providing differentiated analysis of market data sets allowing traders to execute more effectively across high touch and low touch flows and also have the tools to track their individual performance both in-trade and retrospectively on a post-trade basis.
For the latter, the post-trade audit trail provided by OTAS delivers a complete narrative of market conditions and exception analysis over the life of a client order. Agnostic to trade direction or strategy implementation, traders can use this feature to annotate TCA reports to evidence and substantiate trading actions or deviation from strategy due to market opportunities that arose in-trade.

This recent example illustrates how a range of market exception alerts created trading opportunities, prompting the market to react and were subsequently recorded in the audit trail:

Ladbrokes PLC – Monday 25th September

  • Ladbroke’s share price return reached the day lows at 8.32am. All other market conditions remained normal until late morning.
  • The shares then began to rally strongly. OTAS alerted this price behaviour being highly irregular compared to normal expectations.
  • Traders react to this information countering the move, volume increases significantly creating an intra-day liquidity event. Price reversion observed.
  • This behaviour is noted again shortly after as traders take advantage of similar market conditions.
  • Following a period of price stability lit volume temporarily deteriorates.
  • Post U.S market open, a number of exceptional high return alerts trigger creating further trading opportunities.

In this example, the narrative concisely details the market catalysts to support course correction or a change in strategy implementation.

Conversely, the audit trail highlights where there has been no significant market activity to benefit the trader. If a trade execution is being challenged for missing benchmark, the focus should lie with the algorithm performance and provider.

G4S – Monday 25th September – No Notable behaviour

The post-trade audit trail has a historic look-back feature which records and analyses daily market activity for the last 2 years, providing a best execution analysis tool used to help traders and compliance understand and attribute performance outcomes.

 

 

If I remember back to my heady days as a trader, I was the unfortunate point-person on the desk tasked with cooperating with the Compliance team and scrutinizing any unusual patterns in our transactional data., This meant periodically reviewing a sub-set of client orders generated by a TCA exception report due to their variation in slippage from the client strategy benchmark, and then validating the disparity. It was a manual, labour-intensive process often involving trades from weeks or months in the past that typically had to be investigated at the individual execution fill level. For a relatively busy trading desk. it was incredibly difficult to recollect why strategies were changed and specific trading decisions made for many of our discretionary orders. Even less so without tangible evidence or quantitative reasoning.

Today, this type of compliance process is becoming increasingly automated and more sophisticated, but the challenges remain for traders. The onus is on them to rationalize and prove out their trading behaviour. The ability to demonstrate ‘Best Execution’ is multifaceted and currently relies heavily on standard post-trade TCA reports. Yet, many do not provide quantitative historical recorded evidence that validates and supports decision making and course correction in-trade. The OTAS Intraday Lingo application does.

By displaying visual and written exception analysis, Intraday Lingo helps traders easily articulate and support why certain trading decisions were made with respect to prevailing market conditions at specific times during the life of an order. Principally, Intraday Lingo demonstrates four core competencies-

  1. Automates control & process efficiencies,
  2. Proves how trade execution was in the best interest of client orders,
  3. Validates trader behaviour,
  4. Provides full audit history of course correction and market conditions.

Lets look at a recent example:

Hargreaves Lansdown experienced several exceptional market condition events on the 6th July. These event alerts are catalogued in a textual timeline and are also annotated on the return chart. The alerts (visible through the OTAS Alerts app) provided a potential ‘call to action’ for the trader and are recorded by Intraday Lingo as the catalyst for implementing a change in strategy.

  1. Extreme Liquidity – Outsized build in lit market bid/offer liquidity. Opportunity to spread cross using liquidity seeking algos.
  2. Low Return – Idiosyncratic price return. Recalculate participation rate based on order direction.
  3. Wide Spread – Potential liquidity issues. Consider block trading/dark aggregators (such as Liquidnet) for sourcing liquidity and spread capture.

The ability to present such evidence is a must-have for traders under today’s regulatory environment and when populated with order fill data* provides a very powerful, post-trade, compliance friendly tool.

*On product roadmap

Through client led demand, in the last 12 months we have again significantly accelerated the breadth of our offering through strategic channel partners. Our recent partnership announcement with Charles River being the latest OEMS to deliver our trader intelligence via their platform:
https://www.finextra.com/pressarticle/69102/charles-river-and-otas-combine-for-trade-transparency

OTAS analytics are now integrated into the majority of market leading front end Order Management and Trading systems globally, strengthening our partners existing offering by providing leading edge technologies and process relevant analyses linked directly to their clients live order pads.

From initial order acknowledgement and strategy implementation, through in-trade exception management to the final execution fill and post-trade recording, our applications ensure each client/trader has the toolkit to maximise their execution efficiency by keeping them constantly connected with their orders(single stock and consolidated pad level) in way that provides complete transparency for every trading decision they make.

This simple flow chart demonstrates how our trading analytics are applied at various stages in the life cycle of client orders directly through the traders Execution Management System.

Progressive, forward thinking asset managers and trading firms understand the real need to embrace technology to create real alpha in their investment process. As the trading landscape looks set to change again in 2018 with the implementation of MIFID II, firms not using smart technologies will be heavily disadvantaged in an ever increasingly quantitative and systematic marketplace. Let OTAS help you solve those challenges.
Dont get left behind, speak to us directly at otassales@otastech.com or contact your EMS provider on how we can improve efficiency, transparency and profitability across your desk.

 

 

 

In the latest release of the OTAS Microstructure and Alerts components we have focused on providing a number of key trading analyses implicit in a traders decision making process when assessing strategy implementation, directing working order flow and sourcing liquidity.
The combination of these additional elements further establish towards demonstrative best execution obligations for clients whilst providing a recognised structure of compliant procedures.

  • Venue Analysis & Volume at Price – Live exchange volume fragmentation analysis for lit and dark markets including (bid/ask)trade weight intensity, providing supporting evidence for venue selection.
    New volume weighted price graph identifying key levels of trade concentration including venue breakdown.

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  • Block OTC/Dark Pool Volume Alerts – Realtime monitor of outsized traded volume providing alerts for sourcing liquidity opportunities. Calculated on individual stock specific thresholds, the sensitivity of the alerts can be configured to capture genuinely unexpected irregular volume in the stocks you care in.

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  • Alerts Overlay on Microstructure – Opt to see all statistically relevant trading signals overlaid on the microstructure charts to identify intraday impact points. Benefits include, understanding key share price drivers as part of a pre-trade screening process or as a detailed audit trail of why particular trading decisions were made.

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All of the new functionality can be configured and personalised to a clients own specific preference via the settings icon. Simply choose the analysis relevant to your workflow.

For more details or further questions on any of the new analysis contact otassales@otastech.com or to find out more about OTAS Technolgies website here

 

There is a debate in the UK about how David Cameron will be remembered. Further from the mainstream, the New Statesman attempts to define the legacy of New Labour’s “Golden Generation”, whose political careers appear to be over. A common theme of the conclusions is that no matter how intelligent you may be; an inability to connect with the electorate will be your undoing.

The aura of technology is painted by Apple, Google and Facebook; companies that tell consumers what their hearts desire before they know it themselves. The reality of much of the tech world is more mundane, and an inability to provide customers with what they want will kill off innovation.

At OTAS, our quest is to simplify efficient equity trading to the point where all that you need to know is encapsulated in a single chart. To arrive at that point however, is a journey of a thousand marginal improvements, more in keeping with the mantra of an Olympic coach than a Silicon Valley visionary. At each point we test our innovations with the heavy users of our software, collect their feedback and adapt the service to be of incremental use.

The barrier to our one-chart-world is the plurality of use cases for the software; differences that are largely unknown outside of equity trading desks, but which create a number of competing demands. One trader may focus only on the liquidity of orders, while another wants to see unusual price patterns. Some desks desire an automated dealing solution that sends regulation trades for low touch execution, while others require frequent updating on delivery versus benchmark. The quest for one-chartism continues.

To this end we are launching the Intraday Screener. This may be connected to an order book, portfolio, sector or market index and will show you at a glance the outliers in real-time trading.

OTAS Intraday Screener

OTAS Intraday Screener

The example above is of the UK non-life insurance sector. The size of the bubble represents the value of shares traded, while its position shows the deviation from normal in terms of both volume and return. In this snapshot, seven of the eight shares are trading up, a couple of which to an unusual degree (to the right of the chart). Four of the shares are trading with exceptional volume, the most extreme of which is down on the day. By hovering over this bubble we reveal real-time performance data for this outlier, Jardine Lloyd Thompson.

In truth, Intraday Screener is not a single chart. You may change the axes to show whichever combination of performance metrics you desire, be that absolute or relative to normal, relative to a basket of similar shares, liquidity, spread or predicted volume. You may also change the variables defined in the size and colour of the bubble, as well as alter the chart to show a map format. Yet we believe the screener represents meaningful progress towards the one chart to rule them all.

The chart above makes an important point about efficient trading, which is that it is not the biggest order or most liquid name that should automatically command your attention. Trading in such names is most likely to be within the normal range, so that steady execution using a risk-adjusted schedule is the optimum way to complete an order. Often the exceptional action is in other order book names, where close attention is required to avoid losing precious performance. The Intraday Screener shows you immediately the names that require your trading skill.

There are users who trade too few names a day to be concerned about relative dispersion. There are others who trade too many for a single chart to capture effectively. There is even a third category that has to be finished before the portfolio manager makes another tour of the floor. Yet we hope that Intraday Screener proves to be a most useful tool for our customers and one that effectively combines machine learning with their human intelligence.

More and more investment professionals are able to benefit from OTAS’ unique portfolio and trading analytics as we continue to expand our distribution breadth through channel partnerships with integrated front-end OMS & EMS providers and Financial Analysis solution vendors. Our global reach to both Buy and Sell Side clients is now more accessible than ever before.

We have created bespoke solutions with some of the leading trading infrastructure players providing tight integration with their key client-used components.

ems

Our suite of applications are also embedded within Thomson Reuters EIKON product, the collaboration of which has created an analytically differentiated and highly economic alternative to legacy desktop competitors who endeavour to replicate an OTAS-style offering.

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See first hand how Eikon users benefit from integrated Core portfolio analytics via this short online video here

Curious to find out if OTAS analytics are available on your desktop via an existing provider ? Get in touch at otassales@otastech.com.….chances are we are already talking to them !

 

 

The addition of the new Microstructure Stamps to the existing Microstructure chart stack gives traders the clearest view yet of intra-day behavioural shifts in stocks they are trading by providing them with clear and concise signals when short term trends in weight of momentum is changing.
By designing such granularity, decision making around participation rates and identifying potential reversion points has never been more transparent.

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Through comparison analysis on Volume and Liquidity characteristics over a 15 minute moving average period and further breaking these components out into directional indicators, traders can pro-actively react and adjust strategy based on the direction of their order. Spread too is factored over a similar period, identifying those times during the day when price uncertainty is at its greatest and when it is most costly to trade whilst the Return(of the stock) vs Basket chart highlights idiosyncratic price moves over the last hour and flagging when these are extreme.

As an example, a trader with an order in ICAP this morning would have seen the following alert and flags in the Microstructure Stamps:

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Microstructure characteristics:-

  • Alert identifying unusually high volume over the last 15 minutes, driven by a high intensity of sellers as flagged in the Stamp.
  • As a result this has caused the shares to significantly under-perform the bespoke basket. The Return Stamp flag denotes this aggressive move is atypical for ICAP.
  • However, the overall Liquidity picture is also extremely high, with buyers displaying a greater degree of intent to trade than sellers indicating an area of potential price support for the shares.
  • At this point valuable information is available to both buyers and sellers.

Armed with such analysis active traders would have been able to make an informed judgement based on the conditions presented to them, potentially prompting a change in their trading strategy, impact and cost.

With the latest launch of the Express App, users are able to view the most important flags ranked by positive and negative flags in their selected watch list, market or sector. Additionally, users can read the Lingo report on these lists, as well as select the names of interest and view the top stamps for that stock. This feature enables users to view all the most important analytics for stocks of interest in OTAS in one place.

Select Express from the drop down Apps menu:

express app

Select preexisting market from list or type in a watch list name or sector in the Search bar:

Express markets enter

Express Search

Click on Top Stocks to view top positive and negative flags. You may click on a stock to view a natural language report on the top flags.

Express Top Stocksexpress top stock detail

Click on Lingo to view the significant overnight, weekly, MTD, or monthly changes in your list. When you click on a highlighted name, you will be able to see the top flags and a natural language description of the activity.

Express Lingo Express detail

This Express app is also available through a web-based link for users on the go.

The recently released OTAS Lingo stock reports are now fully automated and available in electronic format. Putting you in control,  simply decide the time frame of analysis for a market or portfolio, the frequency of the report and a time of receipt and OTAS will do the rest. Based on your choices, a bespoke automated email will be sent providing you with a complete overview of all the standout activity in the stocks you care about.

Simply click on the orange ‘Subscribe’ button at the top of your Lingo report…..
subs

..then choose the time frame over which Lingo should collate the information (daily report, weekly report, Month To Date or a Calendar month,) the frequency with which you would like to receive it and finally at what time of day.

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View and create multiple reports via your most accessed ‘Top Lists’ on the right-hand side of the screen or mindshare content via the Social Media links.

OTAS Lingo

OTAS Lingo creates automated, natural language reports, which provide you with up-to-date analysis of all the standout and unusual activity in stocks that you care about. Lingo will enhance daily market reports, inform risk management decisions and keep you up-to-date with the latest developments in markets and portfolios, at your desk or on the move.

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Access Lingo from the OTAS Launcher and type the watchlist or sector that you want to see into the search box, or choose an index from the extensive list. In the example below, I have chosen to generate a report on European pharma stocks.

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Lingo immediately generates a report on the sector, detailing calendar events taking place today and highlighting the most significant changes in price performance, short interest, credit, valuation, yield and technicals, as well as any meaningful, recent director (insider) dealing. The text is easy to read, free-flowing and succinct and is all machine generated so you know that the most significant changes are being highlighted, without the emotion and bias of human reporting. For example, here is the comment on overnight moves in short interest.

image2015-2-27 9-12-19

The copy button in the top right hand corner makes Lingo reports easy to share, incorporate into your own reports, or save for future reference.

Watch out for Lingo weekly, monthly and quarterly reporting and do let us know the analysis that you would most like to read, such as stock summaries or detailed portfolio profiles. Lingo is here to save time, improve efficiency and increase understanding of the factors that determine share prices.

Core Summary

Core Summary is accessed through the Components button on the OTAS Launcher. Type a stock into the Launcher search box, or select one from your TradeShaper Order Pad. IAG has reported results this morning and should see an active day’s trading. Typing the stock into OTAS Launcher brings up the Microstructure that enables you to see the detail of today’s trading and the Core Summary that provides a quick view of the key positioning in the stock, which may influence today’s activity.

image2015-2-27 9-51-58

Behind each stamp is one, straightforward chart showing what has been happening in that OTAS factor and a text explanation from Lingo. In IAG’s case, we see a stock that has underperformed the sector over the past week as the price reached a resistance level ahead of numbers. Over the past month the Divergence stamp shows that the price has risen along with EPS Momentum, while CDS has fallen, which is expected to be supportive of the share price. The rise in short interest over four weeks is divergent from the share price trend, but the Short Interest stamp shows that the level has retreated 14% in the week before the earnings release. Operating profit is slightly ahead of expectations and the stock is up almost 5% at pixel time.

The Core Summary may be copied using the button in the top right hand corner. Use it to add colour to reports, emphasize significant developments and to record market positioning at the time of an investment decision.

OTAS is evolving with regular upgrades to functionality designed to assist traders and portfolio managers in day-to-day workflow. Pop up screens such as Lingo and Core Summary may be included in your own internal software, or third party platforms that you use every day. Please contact us for more details, or speak to your software supplier and ask about integration with OTAS.