Study Finds U.S. Broker-Dealers Cornering Canadian Market In Algorithmic Trading

"Commercially available algorithms, primarily from U.S. brokers or vendors, are deemed to be rudimentary for the most part and are not generally seen to be addressing the unique characteristics of the Canadian capital market", said Renee Colyer. Institutional investors say Investment Technology Group (ITG) Inc., a New York based agency brokerage and technology firm, currently leads the pack followed by Credit Suisse First Boston and Morgan Stanley. "The Canadian broker-dealers have the advantage of knowing this market. Whether they partner with a U.S. firm or offer a proprietary suite of algorithms directly, they need to pick up the pace." said Renee. "In reviewing algorithm software, the buy-side indicated that U.S. dealers outflank Canadian dealers in terms of both the level of product sophistication and support." The demand for electronic trading systems and algorithms is being driven by foreign investors seeking participation in the Canadian market, the increasingly global trading environment and more sophisticated Canadian buy-side clients. The study notes that buy-side desire for greater control over trade execution and associated commission compression is a key driver for adoption of electronic trading systems by Canadian broker-dealers. Although the disadvantages of electronic trading technology such as reduced price discovery, potential for error and market structure bottlenecks are significant, study participants maintain that one cannot afford not to overcome them. http://biz.yahoo.com/prnews/070220/to222.html?.v=45&printer=1

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