Investment advisers and money managers are faced with significant challenges in today’s complex trading environment, especially as their AUM continues to grow. Millington Securities’ High-Touch Institutional Trading Services are designed to address these issues.
Trading Away: Many SMA and UMA program sponsors take a strong stance against trade-aways and may even require money managers to execute through the sponsor. Although wrap-fee program sponsors must adhere to best execution requirements, we frequently see large institutional not-held orders are treated like retail market orders, resulting in poor execution.
Liquidity: Without oversight, some broker dealers will take all available liquidity, negatively impacting share price even before a fraction of the order is filled. This activity can signal high frequency traders and other proprietary trading desks using advanced technology to get in front of institutional order flow. Many program sponsors even “sell” their trade execution to other electronic trading venues that focus on trade volume and execution speed, without concern for overall market impact or other client execution costs.
Trade Rotation: Portfolio managers working with multiple broker dealers may experience negative performance impact due to priority rotation shortfalls. Ideally, clients receive the same average price with as little market impact as possible. That becomes difficult or impossible when required to rotate orders at each of your broker dealers over time.
Algorithmic Strategies: Some broker dealers put your large orders in a volume weighted average price (“VWAP”) algorithm without explaining the shortfall of this hands-off approach. VWAP engines attempt to track the volume weighted average price during the time your order is being filled. However, with a “set it and forget it” approach, a large order placed in a VWAP algorithm can negatively affect the stock price in the process. Although you might “succeed” in receiving the VWAP, the average price may suffer as a result.
Millington Securities Institutional Trading Services may enhance your investment performance by attempting to minimize trade costs and market impact. Our high-touch approach can provide anonymity and protect your order flow from abuse both by high-frequency traders and bulge bracket Wall Street firms. Our experienced traders endeavor to find liquidity even in the most difficult situations, for example when order size is greater than 100% of average daily volume.
Our traders work to reduce explicit trading costs and associated wrap-fee program sponsor concerns by minimizing commissions where possible. We also focus on reducing implicit trading costs and actual market impact, attempting to outperform predicted market impact based upon order size, volatility, and market direction.
Our expertise is anonymously trading large block-size orders without signaling the high-frequency players or Wall Street. We strive to improve execution and performance for our investment adviser and portfolio manager clients.
Let Us Become An Extension of Your Portfolio Management Team and Work Towards:
- Obtaining best execution and reducing market price impact
- Outperforming VWAP and other algorithms
- Avoiding trade cost layering problems
- Reducing or maybe even eliminating commissions
- Trading away from program sponsors
- Increasing anonymity and avoiding the high frequency traders
- Finding new ways to improve performance
Results You Can See
We can provide you with customized transaction cost analysis reporting on a daily, monthly or quarterly basis (click here to see a sample report) so you can evaluate our execution quality, and help satisfy your best execution documentation requirements.