SOURCE: Pipeline Trading Systems

April 13, 2007 09:13 ET

Pipeline to Offer Revolutionary Algorithm Switching Engine™

Engine Deemed to Be the First Commercially Available Intelligent Algorithm Selection Technology in the Institutional Trading Arena

NEW YORK, NY -- (MARKET WIRE) -- April 13, 2007 -- Pipeline Trading Systems LLC, today announced the deployment of the Algorithm Switching Engine™, a breakthrough application of predictive analytics that will reinforce and complement The Block Market's™ unmatched ability to deliver execution excellence to institutional traders.

Utilizing historical and real-time trading data, Pipeline's proprietary, patent pending Algorithm Switching Engine will translate the trader's execution preferences into an optimal choice of algorithms and execution styles. When activated by a trader, the Algorithm Switching Engine will work in tandem with the existing Pipeline Block Market, applying world-class predictive analytics to correct the inefficiencies associated with the static choice of a single algorithm on an order large enough to live through significant variations in market conditions.

Fred Federspiel, President of Pipeline, commented, "Our clients know that the most effective way to trade their larger orders is to leverage The Block Market's 20% fill rate for mega-block trades. However, large natural liquidity does not always exist within traders' time constraints, so they are often obliged to algorithmically execute giant block orders by participating in venues that are optimized for sub-block trading. Our clients have requested best-of-breed access to these sub-block markets without the opportunity costs of exiting the Block Market."

Federspiel continued, "While it would have been relatively straightforward to marry Pipeline with a list of well-regarded algorithms, the larger orders served by Pipeline are inevitably exposed to widely varying market conditions, rendering any single algorithm choice suboptimal. Customer demand is much better served by the Algorithm Switching Engine, enabling institutional traders to take advantage of proprietary predictive market intelligence to guide their participation in the retail-sized markets while fully leveraging Pipeline's existing capability to deliver large natural trades -- thereby achieving the upper limits of block execution performance in any market situation."

"If we can't get an order done in a large block venue like Pipeline, we'll often utilize algorithms to complete the trade," said David Brooks, Director of Global Equity Trading at The Boston Company Asset Management LLC. "Pipeline's unique approach -- to automate switching between different algorithms -- makes sense for large blocks with longer time horizons, as well as small residual orders. And since the Algorithm Switching Engine will work in tandem with the core Pipeline block matching functionality, I'll get the best of both worlds. I look forward to taking advantage of this new capability."

To create the Algorithm Switching Engine, Pipeline partnered with Adaptive Technologies, Inc., a leading provider of predictive analytics co-founded by Pipeline's Director of Research Henri Waelbroeck, and with J. Doyne Farmer, Professor at the Santa Fe Institute, and co-founder of Prediction Company. Farmer is a leading researcher in the complex behavior of markets and modeling risk aversion, volatility and price formation.

"While executing a large order algorithmically, I have found that it is absolutely imperative to update tactics to reflect changing market conditions," said Farmer. "Pipeline's dynamic switching engine is the right approach to minimize market impact costs of trading institutional-sized orders in the retail-sized markets."

The Algorithm Switching Engine is a key component to Pipeline 4.0, a suite of performance enhancing functionalities scheduled for release in the second quarter. In its third year of operation, Pipeline offers a unique electronic platform where block traders can enter priced orders for large blocks of stock without the fear of the predatory practices that can occur in traditional trading venues.

About Pipeline Trading Systems

New York-based Pipeline Trading Systems LLC is a registered broker/dealer and operator of Pipeline, an Alternative Trading System (ATS) that enables institutions and brokerage firms to quickly and efficiently trade large blocks of NYSE, AMEX, and Nasdaq listed issues, ADRs and Exchange Traded Funds (ETFs). To date, Pipeline's fill rates and the percentage of trades executing within the National Best Bid and Offer have both been strong. While Pipeline expects those trends to continue, we do not guarantee similar performance in the future. Although there has been no indication to date, high volumes, congested system access and price volatility may impede trading activities. Pipeline Trading Systems LLC is a member of the NASD and SIPC. For more information, visit www.pipelinetrading.com

About Adaptive Technologies

Adaptive Technologies, Inc., (ATi) has established itself as a trendsetter in the application of predictive analytics to develop risk management and business intelligence solutions. ATi's proprietary multi-perspective analysis turns data into intelligent, actionable information. ATi partners with its customers to enable them to make decisions with confidence, resulting in improved performance and reduced costs. For information about ATi, visit www.adaptiveinc.com.

Contact Information

  • Contact:
    Brian Holland
    Pipeline Trading Systems LLC
    212-370-8326
    Email Contact

    Bill Haynes
    BackBay Communications
    617-536-0246
    Email Contact