Leading the way in algorithmic trading in Korea

Korea's Leading Investment & Securities has become the country's first local securities firm to provide algorithmic trading services to its international clients through the use of Progress Apama. The algorithmic trading platform is from US-based Progress Software Corporation, which is a provider of application infrastructure software to develop, deploy, integrate and manage business applications.

Progress Apama is a platform for algorithmic trading and other event-driven applications in capital markets. It puts the control in the hands of traders who can create, deploy, and monitor differentiated trading strategies that offer a real advantage in today's financial markets.

Eric Lim, managing director for Asia at Progress Software, says the deal with Leading shows that the sell-side securities firms in Korea are moving towards improving efforts to meet their customersÆ complex and diverse needs in a rapidly evolving market.

Leading's sell-side brokers will now leverage Apama's flexibility to empower proprietary desks to deploy new trading scenarios, ensure that its algorithms offer competitive advantage over others in the market, and meet the fluctuating needs of its clients.

"In line with the evolution of trading execution globally, the responsibility of manual trade execution previously performed by our traders will wane and be replaced by continuous monitoring of our clients' orders, maintenance and updating of the algorithmic trading platform to meet their demands," says Daniel Kim, Seoul-based head of foreign institutional sales at Leading. ôWith the rapid growth of algorithmic trading, we simply wouldn't be able to best serve our clients without keeping abreast of IT developments and ensuring buy-side needs.ö

Kim says best price execution with minimal market impact, anonymity, low latency, low maintenance, and low commission are among the priorities of LeadingÆs clients.

Leading purchased the Progress Apama algorithmic trading platform with Reuters and QFIX Adapters through Koscom, a professional financial IT solutions firm, which since its establishment in 1977, has been active in the development of the Korea securities and futures market through providing IT infrastructure.

With Koscom providing all the necessary connectivity for the Korean market, and Progress Apama providing the technology platform, Leading will now develop proprietary algorithmic trading and offer it to its institutional clients to trade in the Korean market.

"We compared eight different platforms over a three-month period but finally selected Progress Apama because it surpassed all the others in many aspects," says Kim. "For example, it offers the ability to customise basic algorithms like VWAP (volume weighted price average), TWAP (time weighted price average), and Iceberg (A large single order that has been divided into smaller lots). Also, our clients have the flexibility to write their proprietary algorithms in either GUI (graphic user interface) or standard code. Both these factors were crucial to our decision,ö he adds.

Another advantage, according to Kim, is that the other platforms considered are "black box" solutions, whereas Apama is a "white box" solution, allowing the client almost full control of his strategy from creation, testing, to implementation.

"We are also able to provide complete anonymity of algorithm strategy and segregation between clients. This is a must, considering ever increasing market efficiency is compelling clients to demand greater secrecy to maintain their competitive edge," says Kim.

Established by the Ministry of Finance and the Korea Stock Exchange in 1977 to computerise the securities markets and related-industries systems, Koscom has led the development of the Korea securities and futures market through providing IT infrastructure. Its selection of Progress Apama has enabled algorithmic trading on the Korea Exchange. Progress and Koscom have entered into a strategic partnership where Koscom will develop a localised version of the Apama platform for distribution in Asia. This partnership makes the Apama platform the first commercial algorithmic trading system available in Korea.