The Number Crunchers
"Get ready for lower trading costs and better order execution as algo trading catches on big time with the help of a conducive regulatory framework."
The current information overload has triggered a race to generate disproportionate opportunities out of an overwhelming amount of data. This means financial advisors need to create unbiased, fast and actionable insights for their clients. Algorithmic trading or algo trading a computer programme with a set of instructions which, when run in a multitude of scenarios, gives trading signals based on multiple technical, statistical and mathematical rules is helping advisors, professional traders and institutions generate more profitable trades with the same amount of information. It can be
In addition to offering the clear benefit of removing human bias and emotions, algos offers investors the ability to create and back test strategies under different market cycles. They also facilitate analysis of large data, allowing users to identify market inefficiencies before others, apart from helping them spot market trends early. Supplementing unbiased advice, algo trading also offers broader operating benefits such as lower cost of execution of trades, improvement in liquidity and best execution prices with minimal market impact. In India, algorithmic trading in cash and derivatives segments has touched close to 50 per cent of turnover from just 9 per cent eight years ago. While there has been significant traction, Sebi is adopting a staggered approach in making the regulatory framework more lucrative. Here are some of the key initiatives:
