Humans, Technology and Liquidity

The rhythms of life are what drive our world, from nature to business, from art to architecture. It’s the ability to spot the patterns of these rhythms that can unlock creativity and maximize opportunity.

Algorithms navigate the patterns of the market to the tune of trillions of dollars every month. Such is the advance of technology and evolution of investor requirements in their search for liquidity, algorithmic trading in the US stock market now constitutes 60-75% of total trading volume, according to Quantified Strategies.

These sophisticated algorithmic strategies can find liquidity, even in niche asset classes, that lessen market impact and aim to achieve optimal outcomes. But humans are not out of the picture. Technologists, quants and traders themselves play a crucial role in adding the insight, flexibility and market quality that machines alone cannot provide.

The simplicity of electronic trading belies the scale of the behind-the-scenes complexity involved. Teams of quants and trading developers, working with a vast array of data and technology, create algorithms that spot patterns, unlocking liquidity in markets around the world that change millisecond by millisecond.

Market Rhythms is the start of an immersive journey by UBS and Bloomberg Media Studios to reveal the complexities of electronic trading, by conceptualizing it in a seamless, intuitive way so you can understand it instinctively. 

To illuminate the craft involved, it’s helpful to compare electronic trading with audio production and the creation of music. In the same way that composers use notation and structure to create melodies and harmonies that organize sound into music, UBS experts compose algorithmic strategies that analyze the markets to recognize patterns and make faster decisions. In turn, traders are the musicians—fine-tuning strategies to ensure that advantageous trades are executed with precision, without creating market disharmony. Just as a conductor ensures that every instrument plays in sync, UBS aims to make every trade, no matter how complex, execute seamlessly into the market.

“There is a clear fluidity of sound in the market, whether that’s a peak or trough. It’s when those rhythms are not in sync that our clients value our services most,” says Hosie.

Following the recent integration of Credit Suisse’s low-latency solutions to existing electronic trading strengths, has enabled UBS to focus resources on more complex client needs and its continued investment in new cutting-edge trading tools.

Quants analyze client performance, algorithms help minimize market impact and optimize performance, while UBS’ global team provides insight on regulation, market structure and trading venues. In electronic trading, as in music, mastering the rhythm is what turns market sounds into opportunities.

“We are continuously enhancing our trading models, and always looking for that extra marginal gain to help our clients achieve their trading goals,” says Mark Goodman, Head of Electronic Trading, UBS.

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