Societe Generale algo platform Nova offers a host of services for clients

Navigating a shifting technology environment is never easy. But Societe Generale America's Global Execution Services is focused on doing just that as clients try to deal with more costly, fragmented and complex equity and derivatives markets.

While execution services seems like a pretty straightforward business, the broader backdrop is this: Stock trades are executed on 60+ different venues in the US today, along with 15 US equity options markets and several futures exchanges. Beyond the connectivity is execution, which today is happening in milliseconds, requiring top level order execution hardware and software. Layer in the growing percentage of algorithmic trading volumes and the prospects for artificial intelligence and there is no question that today's global markets are more competitive than ever.

What this means, essentially, is that more parts of the trade execution chain are becoming commoditized and at the same time, more expensive. For a trading firm today, connecting directly to multiple markets takes up enormous resources to update various parts of the execution technology from the firm executing a trade to the exchange to the clearing member firm to the back office and accounting. All of these pieces of the transaction chain need regular software updates and hardware upgrades.

And as exchanges have grown in terms of electronic trading and data services, algorithmic trading has expanded rapidly as well. Societe Generale has invested heavily in this space in recent years to help clients with the design, development and implementation of their own algorithms. That work led to the creation of a new algo platform called NOVA, which provides a host of services for clients.

"Because of market fragmentation, you have a lot to think about how to execute trades," said Morgan Downey, head of sales for Global Execution Services, Americas. "And with volatility in the market, that means more firms are looking at creating reactive instead of linear based algos. Societe Generale is looking at solving the same issues many of our clients are facing."

All of the algos on NOVA are developed in-house at Societe Generale in cooperation with clients, tailoring them to their needs. The bank now has algo development teams in New York, Paris and Hong Kong. And in today's hyper competitive markets, getting your algos built, tested and then live with cutting edge connectivity can be the difference between a profitable or losing strategy. For some firms, they are willing to take on the challenge of dealing with all of the elements that go into trading. But for a growing number of clients, leveraging Societe Generale’s infrastructure and in-house algo team is not only a cost saver, but a competitive edge.

"There is so much microstructure change today that it is getting harder and harder to manage," Morgan said. "And in today's markets, we're talking about razor thin margins."

The NOVA platform was first introduced for futures and international equities markets last year. This year, it will incorporate Americas equities as well, with a goal of offering more flexible algos with additional customization. The technology and automation race will not slow in the coming years, so the execution services team is looking to keep clients ahead with more services. In Societe Generale’s view, the next frontier will be in building multi-asset class algos that can seamlessly trade say, an energy-based ETF with a crude or natural gas futures.

More firms on the buyside are also interested in data, which can be digested by their data research teams and turned into new trading opportunities. Combining algos with data science and more powerful computing power, Morgan said SG is in a solid position to help customers capitalize on the next trend in execution.

Disclaimer

Unless otherwise stated, any views or opinions expressed herein are solely those of Morgan Downey and may differ from the views and opinions of others at, or other departments or divisions of, Societe Generale and its affiliates. No part of Morgan Downey’s compensation was, is or will be related, directly or indirectly to the specific views expressed herein. This material is provided for information purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or financial instrument. The information contained herein has been obtained from, and is based upon, sources believed to be reliable, but Societe Generale and its affiliates make no representation as to its accuracy and completeness. The views and opinions contained herein are those of the author of this material as of the date of this material and are subject to change without notice. Neither Morgan Downey nor Societe Generale has any obligation to update, modify or otherwise notify the recipient in the event any information contained herein, including any opinion or view, changes or becomes inaccurate. To the maximum extent possible at law, Societe Generale does not accept any liability whatsoever arising from the use of the material or information contained herein.

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