Imperative Execution’s AI-powered IntelligentCross ATS shown in independent studies to significantly reduce trading costs for investors, resulting in significant volume growth.
Imperative Execution, Inc. – the financial technology company that created IntelligentCross, an AI-powered alternative trading system built to reduce implicit trading costs – today announced performance results for its first eight months of operations. The venue has matched more than 1.5 billion shares since its launch with an observed price impact following these trades of 0.13bp, which is nearly ten times less than the 1.37bp average following comparable execution on U.S. securities exchanges. At the current rate of U.S. equities daily turnover, savings of that magnitude could save investors $10B per year.
IntelligentCross is the industry’s first smart venue to use artificial intelligence to optimize order matching to help investment managers and brokers reduce trading costs and improve execution quality on behalf of their clients. Its design was borne out of its founders’ years trading on the buy-side, where traders are obsessed with implementation shortfall (IS) costs – in other words, the difference, or “slippage,” between the arrival price and the execution price for completing a trade. Though explicit costs have been the focus of much of the recent equity market structure debate, IS costs are enormous and represent the vast majority of an investor’s trading costs.
Roman Ginis, Founder & CEO of Imperative Execution, commented: “We built IntelligentCross to make the market more efficient by minimizing investors’ most significant trading costs: Market Impact and Adverse Selection. These implicit costs represent the lion’s share of the total cost of trading and are an invisible tax on investor returns. With more than nearly eight months of data now available to evaluate, it’s extremely gratifying to see multiple independent analyses demonstrate that we’re fulfilling our mission.”
Over the past several months, a number of independent brokers have reviewed their own trading performance data and found IntelligentCross has significantly reduced their clients’ IS costs, which are increasing industry wide. In February, ITG (shortly after acquired by Virtu) found that IS costs were 34.2 bps for U.S. equities in Q4 2018, a 24.3% increase over the previous quarter and the highest level since 2015.
Ray Ross, CTO and Founder of Clearpool Group, said: “As a provider of holistic and transparent electronic trading solutions, we support innovative venues like IntelligentCross that are designed to provide high-quality prints for institutional investors. Ultimately, as an unbiased intermediary, Clearpool enables its clients to make decisions on where to trade, which requires quantitative analysis of venue performance to determine how to optimally integrate venues into their routing protocols. From what we’ve observed in Venue Analysis, IntelligentCross is a quality source for mid-point liquidity.
Larry Tabb, Founder and Chairman of Tabb Group, added: “The tremendous amount of market structure and trading technology innovation over the last decade has resulted in a huge decrease in the overall cost of trading, but implicit costs remain stubbornly high. Reducing these costs is almost always cited by the buy side trading community as one of their most pressing objectives. The use of AI to address this issue is one of the more novel approaches we’ve seen, and the findings of these brokers seems to be validating this approach.”
About Imperative Execution
Imperative Execution is a financial technology company that engineers smart, efficient trading venues. It focuses on improving market efficiency with systems and platforms that optimize for investors’ trading objectives. Founded by financial industry veterans and trading technology experts, Imperative Execution is the parent company behind IntelligentCross, the industry’s first smart venue to use machine learning and AI to optimize order matching to help investment managers reduce costs while maximizing liquidity. To learn more, visit www.intelligentcross.com.