BestEx Research launches a no-code framework for building and optimising Implementation Shortfall (IS) execution algorithms

June 08, 2023 - Algorithmic trading solutions provider BestEx Research Group has launched a no-code framework for building and optimising implementation shortfall (IS) execution algorithms, called the Adaptive Optimal (IS) Framework. This framework allows clients to create personalised algorithms for executing trades and to compare their performance.

Adaptive Optimal allows buy-side traders and sell-side providers to develop completely custom IS algorithms and understand the impact of design decisions on resulting execution costs. The new no-code framework enables traders to make design choices based on their unique order flow and preferences, such as whether to trade quickly or opportunistically, adjust strategies based on market conditions, and more. The platform also includes A/B testing tools for fair performance comparisons and helps answer long-standing questions about optimising trading performance. This innovation aims to replace the traditional one-size-fits-all approach to trading algorithms and provide customised solutions for better results.

The Adaptive Optimal (IS) Framework not only benefits buy-side traders but also sell-side firms. It allows sell-side firms to offer and support various customized algorithms without the need for coding. They can recreate their existing algorithms quickly using the platform's user-friendly tools and continue to experiment for improved performance. By partnering with their clients, sell-side firms can build optimized trading solutions. The framework addresses existing challenges in trading algorithms, such as inflated trading costs and design issues that do not consider individual investment managers' preferences. With this new tool, BestEx Research aims to revolutionize the industry by providing tailored and efficient trading algorithms that meet the specific needs of each client. 

Hitesh Mittal, Founder and CEO of BestEx Research, commented on the new framework, "This is groundbreaking for our industry. For the last two decades, buy-side firms have used opaque, black-box implementation shortfall algorithms with just a handful of urgency settings, but such limited algorithms simply cannot work well for all portfolio managers for all types of orders. True optimisation of trading costs requires careful examination of orders' alpha, the execution risk preferences of the managers, and the intraday liquidity in each product being traded, and Adaptive offers the tools to help our clients achieve that goal–something that's been out of reach for decades. 

"It's not only that existing IS algorithms are not tailored to each investment manager; they also tend to suffer from a number of design issues that inflate trading costs unnecessarily–misunderstanding the tradeoff between market impact and alpha decay, overly aggressive order completion behaviour, and long-term adverse selection are a few examples. Our new Adaptive Optimal (IS) Framework addresses these challenges and allows us to create customised solutions for each of our clients."