Algorithmic trading: BoA harnesses rocket science for trading race
Bank of America gets the edge with its acquisition of Financial Labs.
Market players believe Bank of America has pulled off a shrewd move with its takeover of Financial Labs, a specialist in algorithmic-driven pricing and trading.
FinLabs is a trading firm based in Cambridge, Massachusetts, staffed by a team of mathematicians and astrophysicists. One market participant says that FinLabs has a market-making program that sends many bids and offers into the various liquidity platforms that make up the FX market. When it trades, it immediately switches to the other side of the deal and it is said to capture the bid-offer spread repeatedly throughout the day.
Christiane Mandell, global head of foreign exchange for Bank of America, says: “This acquisition is another important step in achieving the overall growth plan we have set out for Bank of America’s foreign exchange platform.”
She adds: “The team of physicists and astrophysicists that are the core of Financial Labs have established themselves as leaders in high-frequency trading. Their expertise meaningfully enhances our ability to provide automated, efficient pricing to our clients and continually deliver world-class market making.”
This all seems a world away from the days when cable traders in London took positions depending on whether the tide was in or out in the River Thames.