BestEx Research launches no-code framework for IS algorithms

Rick Steves

“True optimization of trading costs requires careful examination of orders’ alpha, the execution risk preferences of the managers, and the intraday liquidity in each product being traded, and Adaptive offers the tools to help our clients achieve that goal–something that’s been out of reach for decades.”

BestEx Research has launched a no-code framework for building and optimizing implementation shortfall (IS) execution algorithms.

The independent provider of high-performance algorithmic execution and measurement solutions for equities, futures, and FX trading introduced the framework to allow clients to create tailored implementation shortfall algorithms and compare performance through experimentation for truly optimized, custom design for their unique order flow and preferences.

“Understand the impact of design decisions on resulting execution costs”

The BestEx Research Adaptive Optimal (IS) Framework allows buy-side traders and sell-side providers to develop completely custom IS algorithms and understand the impact of design decisions on resulting execution costs.

The framework features speedy customization of common IS preferences, like whether to pace trading or favor an opportunistic approach, whether orders must complete, shifts in execution strategy based on market conditions, and more.

The platform’s built-in A/B testing tools allow for experimentation across strategies for fair performance comparison, resolving traders’ long-standing questions about how to optimize performance.

Adaptive Optimal also allows sell-side firms to provide and support virtually any IS algorithm, tailoring offerings to each individual firm, trader, and order with no coding required.

The platform’s point-and-click algo development tools mean sell-side firms can quickly recreate their existing offering in BestEx Research’s Algorithm Management System (AMS) while continuing to experiment for improved performance and partner with their clients to build optimized trading solutions.

Existing IS algorithms tend to suffer from design issues

Hitesh Mittal, Founder and CEO of BestEx Research, said: “This is groundbreaking for our industry. For the last two decades, buy-side firms have used opaque, black-box implementation shortfall algorithms with just a handful of urgency settings, but such limited algorithms simply cannot work well for all portfolio managers for all types of orders. True optimization of trading costs requires careful examination of orders’ alpha, the execution risk preferences of the managers, and the intraday liquidity in each product being traded, and Adaptive offers the tools to help our clients achieve that goal–something that’s been out of reach for decades.

“It’s not only that existing IS algorithms are not tailored to each investment manager; they also tend to suffer from a number of design issues that inflate trading costs unnecessarily–misunderstanding the tradeoff between market impact and alpha decay, overly aggressive order completion behavior, and long-term adverse selection are a few examples. Our new Adaptive Optimal (IS) Framework addresses these challenges and allows us to create customized solutions for each of our clients.”

Algorithms developed using the Adaptive Optimal (IS) Framework are powered by BestEx Research’s trading technology and supported by their multi-asset Algorithm Management System (AMS).

BestEx Research’s AMS offers transparency and control over execution for buy-side traders and sell-side providers to view and interact with their trading, review transaction cost analysis throughout each order’s lifetime and historically, and build custom algorithms, Smart Order Routers (SORs) and liquidity-seeking strategies.

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