It is another hot topic - cross asset auto-trading. Along with the MiFID (Markets in Financial Instruments Directive) and Reg NMS, super topics of the current environment, there are few ‘bigger deals’ in the world of big finance. In my pouring over the backissues on the Fix Global site - I found another good paper on Multi-asset trading. In case you did not know - it is all about automated trading. I was speaking to a friend Friday night who writes about automated and algorithmic trading for one of the Institutional Investor publications. We were both talking about statistics we’ve heard/ read, the state of the art and world according to auto-trading. Boy is it an excited time to be working amidst the technology war on wall street, along the road to exponentially increasing amounts of rapid automated trading!

This paper talks about something I have been waiting for for some time. Custom multi-asset, roll your own, on the fly cross asset product synthesis. It looks something like:

• I have some risk profile I want to create.
• I want 1 part fx cash, 2 parts near expire option, 1 part fx.
• I plug in my underlyers…
• Blamo -my own custom structured ‘new product’
• Now I trade these things as if it were a ‘real’ instrument traded at an exchange
• My EMS systems manage the execution etc.

These ’strategies’ are what currently happens in some places, but they are still not so ‘formalized’ as to be easy to do, par for the course and ‘the norm’. Trading is complex for sure, and there are still plenty of integration issues that make the advanced version of the above vision - still not here yet… Soon enough!!!

-Chris

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