Following closely on the heels of UBS’s November launch of Options Direct Market Access (“DMA”) with 14 providers of electronic Execution Management Systems (“EMS”) and Order Management Systems (“OMS”), UBS announced today the launch of Options Algorithmic Trading with leading OMS and EMS providers.
Our clients want sophisticated tools that give them the ability to place options orders that are responsive to market conditions,” said John DiBacco, head of US Equity Derivatives Trading. “We started with the foundation, building intelligent order types within our DMA offering, and making our robust options smart order router available through third party partners. Algorithms are the natural next step in the evolution of this market.”
Four new algorithms will be launched in this first phase, offering UBS clients who trade Listed Options a suite of more advanced, intelligent order strategies that employ logic and offer customizable parameters. The four UBS algorithms being launched in this first phase are:
Options Delta Adjust – a strategy that enables a trader to peg an order’s limit price to a specific delta
Options TWAP – intelligently spreading slices of an order across a specific time period, with the ability to peg to delta
Options Trigger – an algorithm that operates with a price-conditional model related to the underlying stock
Options Scale Trigger – uses parameters for a price range, a “scale,” and employs interpolation for more aggressive orders
Within their OMS, clients will be able to launch an electronic order ticket to utilize and manage parameters for UBS Options Algorithms directly from their desktops. Then the UBS smart router will route these orders – based on the algorithm’s behaviour and client’s settings – to the best options exchanges at the right time.
“These four algorithms are just the beginning,” added DiBacco. “The next step will be strategies designed with even more advanced logic to handle larger blocks, manage market impact, vary aggression, and hedge equity exposure. As overall options volumes – particularly electronic trading volumes – continue their exponential growth, we will see an explosion of very interesting and innovative technology. It’s an exciting time to be in the options markets.”
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