Bloomberg announced the launch of Strategy Optimizer, a tool that increases the efficiency of exchange-traded fund (ETF) trading workflow, and helps reduce overall cost of execution. It enables portfolio managers and traders to efficiently and effectively manage large lists of ETF trades in a single click.
The tool can analyze multiple ETFs and their underlying holdings and quickly identifies packages of correlated trades, thereby helping to minimize market impact.
Maximizing the overlap of multiple ETFs’ underlying securities helps to minimize trading risk, resulting in better pricing, and helping to lessen overall execution cost. Strategy Optimizer allows clients to modify and change the packages to meet their strategy or create new package trades. Once the optimal packages are created, clients can submit the trades to one of the more than 200 dealers on RFQe, Bloomberg’s ETF Request for Quote service, for pricing and execution.
“We are pleased to support Strategy Optimizer, which will allow market makers like Citadel Securities to enhance ETF liquidity provision for portfolio trades and rebalances, helping to drive down execution costs for end investors,” said Thomas Sozzi, head of Institutional Equities Electronic Sales at Citadel Securities, in a statement. “Bloomberg’s integrated analytics and pairing optimization logic will help clients intelligently match offsetting ETF basket exposures in multi-leg RFQs, ultimately leading to a more resilient and efficient market for all participants.”
“As a market maker, part of our function is to support increased efficiency and competition in the ETF market. When clients are able to lower their execution costs and manage risk more effectively through the continued development of the ETF RFQ ecosystem, that helps to further that goal,” said Ian Shea, head of Fixed Income Trading, Europe and Asia at Jane Street, in a statement.
“Strategy Optimizer is an excellent example of client-led innovation, and highlights the partnership we have with clients as we continue to invest in tools and solutions that provide them with advanced functionality and enriched workflows,” said Nicholas Bean, global head of Electronic Trading at Bloomberg, in a statement. “ETF trading strategies are constantly evolving as the ETF markets experience near exponential growth. Market participants are turning to tools like Strategy Optimizer to help them secure better pricing for their trades, while managing risk and reducing execution costs.”