Home > Products > TrustNet > SmartStart Modules > Automated Trading Interface

 

TrustNet
SmartStart Module Overview

Automated Trading Interface

 Click here to open printable pdf of this page

FUNCTION:
 

  HWA never forces its clients to work with a specific electronic trading provider. We encourage you to choose the firm you want to work with. We can build an interface that fits your operations and their data formats.

We have experience with a number of trading platforms, including:
 
  • American Skandia
  • Federated Investors
  • Fidelity Investments
  • FinTech Securities
  • Investors Fiduciary Trust Company (IFTC)
  • National Securities Clearing Corp (NSCC)
  • Citi Smith Barney through X-TRA
  • Security Benefit Life
  • State Street Global Markets
  We also have a project underway with Matrix Settlement and Clearance Corp that will execute trades with nearly all mutual fund families.

The timing for trading mutual funds is different from the timing for trading equities. The list above represents experience in both types of security. When trading equities, the expectation is that the trade will take place right away, and the price will probably be known the same day. When trading mutual funds, all trades placed that day will execute at close of business, with the prices being known the following morning.

We have experience with trading interfaces for omnibus custodial accounts as well as individually registered custodial accounts. We can either send each trade to be executed in its own account, or send consolidated trades to one or more omnibus accounts.

The steps involved in automated trading are to:
 
  1. Identify the transactions that are ready to trade. From the pool of daily transactions, this would exclude transactions that have already traded, and exclude transactions that are not ready to trade.
  2. Create a data file of trades that matches the format specified by your partner firm.
  3. Transmit the file to the firm that will execute the trades.
  4. Receive the “answer file”.
  5. Import the executions and release the trades.standard and extended formats.
  For equity trades, the import process fills in the price, commission, SEC fee (for sales) and dollars for each transaction.

For mutual funds, we would typically fill in the price and number of shares. If the trade relates to liquidating a position, we would be selling a certain number of shares, and would fill in the price and dollars.

For mutual funds, we also have experience with processing exchanges. This is a situation where a pair of transactions moves a certain number of shares from one fund to another. The price from the Exchange Out transaction will determine the dollars available for the Exchange In. From those dollars, we can calculate the shares for the Exchange In. Exchanges are only available within the same fund family.

One tricky element of equity trading is the potential for partial executions. This could happen if you submit a trade for a security that is thinly traded. The strategy there is to allocate the shares that were traded, and create new orders for the untraded shares to submit the next day.

We also have experience with locally executed trades. Some brokers trade foreign securities in the local market if they expect to get a better execution there compared with an ADR in the US market. These trades are typically executed as of the original date, but the return of information may be delayed due to time zone changes.

We are flexible to either create trades that net buys and sells of the same security to a single transaction, or to always submit separate buys or sells. We have experience with either strategy and can configure the software to fit your decision.
 

BENEFITS:
 

   An Automated Trading Interface adds value to the core system by …
 
 
  • streamlining the trading process.
     
  • improving execution speed compared with a telephone call to your broker.
     
  • eliminating double entry of trades in two systems.
     
  • providing potential commission savings because brokers can provide more efficient service when trade orders are submitted electronically.
     
  • moving toward the faster settlement needed for T+0 processing standards.