TORA announced that a new quantitative execution strategy optimizer and its pre-trade analytics will both use artificial intelligence, in reply to buy-side clients needing to meet best execution requirements as part of European regulation MiFID II.
TORA is a San Francisco-headquartered firm that provides a cloud-based order and execution management system (OEMS) for equities and equity options and futures.
Its new optimizer, called AlgoWheel, will help firms create “scalable, systematic best execution processes”, according to the company.
David Tattan, head of European Business Development at TORA said in a statement: “MiFID II raises the bar for traders to deliver and demonstrate best execution to investors and regulators.
“Automation and artificial intelligence will play an important part in helping them keep up with market complexity and a proliferation of information to process.”
As part of MiFID II, firms are mandated to demonstrate they have taken all sufficient steps to achieve best execution, which has boosted electronic trading across asset classes because it creates a digital audit trail.
How AI fits in
TORA’s AlgoWheel uses advanced AI technology to automate low touch order execution or provide real-time market intelligence for orders needing human intervention.
It provides a feedback loop that uses historical and real-time order level execution information to identify the optimal broker algo and inform the trading decision-making process.
Broker algos have proliferated, particularly in equities, over the years, making it difficult for traders to prove which is best to use for any given order.
In a separate announcement, TORA also announced that its pre-trade transaction cost analysis will use AI techniques to accurately estimate price slippage for trades before they enter the market.
Price slippage is the difference between the expected and executed price of a trade, which happens in the time delay of a trader entering an order and a broker receiving it.