NEW YORK, March 7, 2016 /PRNewswire/ -- AX Trading LLC, the first Electronic Trading Network, today announced that owing to the architecture of its trading system, the effort to secure best execution and the establishment of an audit trail are met. Under best execution requirements, institutions are frequently mandated to provide data that demonstrates that they sought best execution on each trade and that retrospectively they have an audit which captures the facts and circumstances of every trade. Consistent with AX's view of increasing trade quality and improving market structure, providing this capability is additive to the AX's trading.
By using AX, live ITTs or Invitations to Trade alerts are sent simultaneously to 5,000 market participants. By using AX in the first instance, this alert establishes that the initiator of a trade broadly disseminated a live order against which any number of other participants could execute. In addition, AX maintains an audit trail of all ITTs and subsequent activity around every order. These features are embedded in AX and occur naturally on all orders as participants trade.
Because portfolio managers should define what best execution means to the specific funds that they manage, including qualitative and quantitative measures of execution quality, venue choice and price are not the sole considerations. The portfolio manager — as a fiduciary with respect to clients' accounts — has an obligation to ensure that trades are executed in a manner that is optimal under the particular circumstances and to achieve the best result for the client in terms of both explicit and implicit costs. This obligation comes with an independent duty to conduct analysis of the quality of the executions achieved by the brokers. Execution quality must be seen from the client's (not the firm's) perspective by the best execution rules. Criteria include: order type; toxicity; book depth; speed, and trading and routing strategies. AX accounts for all these considerations.
Institutions may also seek best execution by trading anonymously without signaling to other participants that the institution is trying to establish or unwind a position. Low counterparty risk is another important factor to consider. The nature of the participants, liquidity, operations, and trading rules of a given dark pool combine to create a spectrum of liquidity and information leakage outcomes. As such, how a given venue works and who is trading on such a venue are important considerations for managers, and they need understanding and transparency in these areas.
Additionally, a hot-button issue these days is whether a conflict of interest exists for the venue receiving the institutional order, either in connection with the venue's own proprietary order flow or that of the venue's largest customers. In fact, FINRA, which regulates broker/dealers, is looking closely at best execution in the context of order routing. Part of FINRA's focus is on conflicts of interest.
Said George O'Krepkie, Chairman of AX: "In today's regulatory, compliance and risk driven environment, which tends to increase costs, covering best execution requirements becomes a daily activity which is essential for the ongoing viability of the firm. AX provides execution quality and, because of how we have architected the system, we provide both broad dissemination of any order in the first instance and an audit trail that tangibly tracks and demonstrates all activity around that order. We are committed to providing a genuine solution to market structure difficulties on behalf of our clients."
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About AX Trading LLC
The AX Trading Network is the market's first "Electronic Trading Network" (ETN), allowing institutional traders to proactively connect and trade with other counterparties in a secure environment. In today's trading world, where more and more liquidity is being withheld from the market, AX provides a way for institutional traders need a way to proactively reach out to targeted counterparties but in a way that protects their trading intentions and their identity. AX Trading, LLC is a SEC-registered broker-dealer and Alternative Trading System (ATS) and is a member of FINRA and SIPC. AX can be reached at 917-262-0388 and at www.axtrading.com.
SOURCE AX Trading LLC