Cowen Launches Algo Trading Tool to Navigate Retail Flow

Broker-dealer Cowen has launched an algorithmic trading tool aimed at helping institutional clients navigate market dynamics caused by increased volumes of retail trading.  Named Inaccessible Liquidity Adjustment, the tool offers clients the option to adjust their trading for liquidity deemed inaccessible, often due to retail trading activity, on a single-stock basis as they execute orders in the broker’s algorithms. It calculates the percentage of inaccessible liquidity for each US security on a weekly basis using the previous three months of Financial Industry Regulatory Authority (FINRA) and off-exchange data. Traders can then choose to reduce their aggression on a single stock basis depending on its rate of inaccessible liquidity, by opting in to directly adjust participation rates in the algorithms. Clients can apply the tool to certain strategies or on an order-by-order basis. Cowen said the tool would help clients navigate the ever-evolving landscape in the US following “fundamental shifts” in its structure seen in the last year following an influx in retail investors.