BofA Merrill Lynch Rolls Out High-Frequency Powered Trading Platform
Bank of America Merrill Lynch (BAC) has launched a high-speed
system for electronic stock trading, built for the bank by a
high-frequency trading firm.
The platform, called BofAML Express, aims to provide rapid
connections to U.S. securities exchanges alongside new risk control
measures now required by the Securities and Exchange
The system was designed by Thesys Technologies LLC, a New
York-based subsidiary of Tradeworx Inc., which runs its own
high-frequency trading strategies.
"We were looking for a company with experience in
high-performance technology to build a platform to our
specifications that would give us an edge in the marketplace," said
Michael Lynch, head of execution services in the Americas for
Quantitative trading firms doing business through the bank are
early users of the platform, though ultimately the capabilities are
expected to be picked up by other, less technology-intensive
The system already is up and running, with the activity running
through the platform estimated to make up 2% to 3% of daily U.S.
stock trading on average, Lynch said. About 6.7 billion shares have
traded per day over the first half of July, according to research
from Raymond James Financial (RJF).
Beyond share-trading, BAML intends to next apply the system to
futures, and later markets in Europe and Asia.
Thesys launched in 2009 as a way for Tradeworx to leverage the
technology built to power its own automated trading activities. The
unit stands among a range of efforts by private trading groups to
develop customer-facing businesses in a bid to diversify beyond
buying and selling securities and derivatives contracts.
Other automated trading firms have offered for sale trading
algorithms backing their own strategies, or are exploring ways to
facilitate the orders of retail-level investors.
Key to the BofAML Express platform is the ability for users to
have their trades overseen by fast-acting risk monitors, ensuring
that any one customer doesn't build up a too-large position or
enter a wildly outsized order.
The SEC this month began requiring some such controls for firms
accessing U.S. markets through a broker, seeking to clamp down on
electronic traders gaining unsupervised access to exchanges. A full
range of checks are expected to be in place by the end of the year,
covering bond markets alongside equities.
The BAML platform allows risk checks to be done and orders to be
carried out in less than 10 microseconds, according to the company.
A microsecond is one millionth of a second.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;