PDQ

The implications for the electronic markets with a PDQ facility are profound and far reaching. The PDQ process will allow algorithmic LPs to respond to live orders and create more efficient markets. The time to execute, the market impact, and the depth of the markets will be enhanced with the use of PDQ. This is a WIN-WIN-WIN arrangement. It is a WIN for the order sender, who gets the potential of more liquidity without risk. It is a win for the algorithmic firm which is able to make more informed and less risky actions. It is a win for the marketplace because it will develop larger and more liquid markets. Additionally, liquidity seekers will no longer have to ping multiple venues for execution.

Anonymous block trading will become a reality with the abilities provided by PDQ to quickly price, respond and assemble block requests in a fraction of a second while mitigating the risks of extended execution and information delays. Dealers will be able to make more substantial markets while lowering overall market and systemic risk.

A significant attribute of PDQ for maintaining market efficiency and capacity is PDQ’s ability to off load message traffic from the electronic exchanges. Instead of battering the exchange with small machine gun orders, the LPs can respond with significant size orders that have a dramatically higher probability of being executed than the spray of small lot orders. Also, as algorithmic processes and strategies become more complex and computing intensive, they can be run in an off exchange facility at PDQ fully prepared to respond when they are triggered appropriately.

In the fractured and stochastic world of electronic trading one of the victims of automation has been the specialist and market maker dealer. The old method of posting markets and handling orders with manual executions has been over run by the highly efficient computers of the algorithmic traders. PDQ will allow for the rebuilding of the specialist and dealer function, particularly in the less liquid securities, by presenting them with the tools needed to make markets in an algorithmic fashion. Orders can be modified by general market conditions, and the specialists can respond to incoming flow (the typical specialist function) in a familiar historical method, but now with the help of PDQ they can do it electronically and in a fully automated process.

PDQ will transform the stochastic electronic market into the multi-dimensional next generation of e-trading.