UBS has launched a new algorithmic trading strategy called “UBS Swoop,” designed to support clients on discontinuous liquidity and hard-to-trade or low-volume securities.
“The availability of equity liquidity is never a given, but for some securities it is even more elusive,” says Owain Self (pictured), Global Head of Algorithmic Trading at UBS. “Traditional algorithms were built to trade on a schedule, which means they are not suited to appropriately capture unanticipated bursts of liquidity. Our clients tell us that at times, for certain securities, they need a strategy to operate on an ‘I would if I could’ basis. So we designed Swoop to wait, watch and intelligently act upon those unpredictable moments.”
Previewed for clients at this week’s UBS-hosted Small & Mid Cap Symposium in Boston, Massachusetts, this trading strategy employs innovative non-schedule based behaviour that enables the algorithm to capture highly elusive liquidity in an opportunistic way.
While all UBS algorithms use stock specific characteristics to determine the optimal way to trade, UBS Swoop is the first strategy specifically designed for trading illiquid stocks, including small cap and low ADV securities. The liquidity-seeking order type has discretion to trade when appropriate opportunities present themselves and carefully allocate “child orders” *) to the markets and alternative trading venues the firm identifies as the best sources of liquidity for low volume securities.
UBS Swoop is also unusual in that it is being launched globally. Differences in market structure and in liquidity patterns across the world mean that trading strategies must behave differently in each location, in order to seek best execution for clients at the market and security level. UBS is simultaneously launching regionally-tailored versions of UBS Swoop in the US, EMEA and several markets across the Asia-Pacific region.
UBS Direct Execution is the firm’s global institutional electronic trading business. Direct Execution offers ultra-low latency Direct Market Access (DMA), a suite of award-winning advanced Algorithmic Trading strategies, a state-of-the-art analytics platform – offering Real-Time TCA – called UBS Fusion, and a multi-asset international execution management system called UBS Pinpoint.