Getco, the pioneering US high-frequency market-making firm, is for the first time making its proprietary algorithms available to outside traders.
The new product, called GETAlpha, will use Getco’s technology and trading software to execute Speed Traders’ orders in tiny pieces at high speeds, much as the marketmaker itself does.
The trades will be sent both to exchanges and to dark pools, including the company’s Getco Execution Services pool, which has been rebranded as GETMatch as part the expansion of Getco’s offerings to outside clients.
It is among the first algorithms, including one by Deutsche Bank earlier this year, that aim to allow traditional “buyside” firms such as hedge funds and mutual funds to directly mimic the methods of high-frequency traders.
However, Getco is unique in that it is itself a high-speed trading firm that makes money by using its algorithms.
Getco, launched in 1999 by two floor traders on the Chicago markets, has been at the leading edge of an electronic upheaval in US stock markets, as technology-heavy high-speed trading firms have come to dominate trading, accounting for as much as 70 per cent of the market by some measures.
The firm has kept close counsel, preferring not to discuss its methods in great detail publicly, so the move to sell some of its expertise is a significant departure.
“We saw an opportunity to grow Getco and leverage the infrastructure and experience we have to create new business lines,” said Daniel Coleman, head of business development at Getco. “Several clients asked us to get into this business.”