Does algorithmic trading help fund managers achieve best execution and, therefore, ease their fiduciary responsibilities?
EP: In targeting best execution, it is essential to understand the investors objectives when they place orders and ensure that the micro execution strategy of the algorithm is in line with the traders macro objective. Algorithms are defined programs that are targeted to achieving an investors stated goalwhether it is VWAP, arrival price or another benchmark. A key part of the evolution of the automated trading space is in taking this implementation goal, along with a traders cost and risk preferences, and providing an explicit representation of an algorithmic strategy with its parameters. Thus, best execution, in the context of complex investor objectives, is nicely handled by algorithmic trading, which is tightly coupled with pre-trade analytics. Will automatic execution strategies become the norm for the buy side? Steven Kreichman, Citigroup: Automatic execution strategies, including direct market access (DMA) and algorithmic trading, will continue to be an important part of the buy-
