A standardisation of coding for automated trading programs, which allows trading algorithms to be developed substantially quicker, could revolutionise the stock market.
Trading algorithms have become increasingly commonplace as firms have realised the potential to offer a fast way to spot, and act upon, market opportunities. Now new coding, dubbed FIXatdl, offers a way to reduce the time between the conception and implementation of putting new and revised algorithms in place.
The algorithms offer the advantage of being quicker and more reliable than stock market traders, as well as also not actually being stock market traders, which is presumably at least part of the reason behind development.
"It's mostly a time-to-market issue for these algorithms," senior technology analyst at Jordan & Jordan, Greg Malatestinic, told the Wall Street Journal.
The standardisation, which aims to do for stock trading what HTML has done for web browsing, will significantly reduce the time for coding new and revised algorithms from weeks or months to less than a week. Furthermore, man hours will be cut down meaning labour costs could also be reduced.
The new 1.1 version of FIXatdl has learnt from the mistakes of the 1.0 version released in 2008. and is beginning to be implemented as an industry standard
"Version 1.0 probably got people engaged in thinking about it more," said Jim Campbell, Investment Technology Group's product manager for trading network ITG Net, while the new incarnation "puts us in a position universally to begin to move toward this standard.”
“Really in the last quarter is when we feel like there's some critical mass that's been building up. Now that there's momentum here, we're certainly working with [the brokers] so we can adopt it."