Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Trading Technology

12:25 PM
Connect Directly

Deutsche Bank's Marques Is Focused on Developing Smarter Algos to Access Dark Liquidity

Jose Marques is heading up algo development and DMA trading at Deutsche Bank.

Jose Marques joined Deutsche Bank in January as managing director and head of equity electronic trading with a global mandate to build out algorithmic trading and direct-market-access (DMA) products through a uniform offering. "I really joined to build upon the success of the franchise and enhance the equity electronic trading platform," says Marques, who oversees all aspects of equity electronic trading and DMA, including algorithmic trading within Deutsche Bank's Global Markets division.

Specifically, Marques will head three areas: product development, sales (distribution and marketing), and technology. As such, he will supervise a significant number of employees globally across all three areas.

Two weeks into his new job, Marques was traveling extensively on a world tour of Deutsche Bank's key offices for algorithmic trading and DMA product development when Advanced Trading caught up with him. He was in Hong Kong and then heading to London the following week. "We have product-specific algo developers in every market that we trade," he explains. "Developers are managed globally, but there are specialists in each and every market."

Marques joined Deutsche Bank from Credit Suisse, where he was a managing director in the alternative execution products group. He brings 15 years of experience in the capital markets with him, including senior electronic trading positions at Morgan Stanley and Goldman Sachs.

In explaining what attracted him to Deutsche Bank, Marques cites the bank's diversified client base, which includes institutional investors and hedge funds. "It's underappreciated that Deutsche Bank has a huge footprint and can facilitate low-latency trading in 60 market centers, with Asian markets being a major differentiator," he says. "[Deutsche Bank] has a market-leading prime brokerage product and some of the best quantitative and trading minds on the Street," he adds.

Developing Smarter Algos

While Marques declines to discuss specific algorithms in the product pipeline, he indicates that algorithms under development will focus on smarter ways to source dark liquidity. "This year will be a lot like last year in that certain issues haven't really been resolved in the marketplace. We will see clients focusing on better, more intelligent ways of aggregating dark liquidity in various forms," Marques says.

"That is clearly topical with the SEC at the moment," he adds, referring to recent proposals from the SEC to increase transparency in dark pools. Marques says he is watching regulatory developments closely. "The SEC is going to help us define the ultimate market structure and what dark liquidity is. It's our job to deliver that liquidity to clients in a way that solves our trading problems," he notes.

While the potential new rules are likely to affect the way that algorithms interact with dark liquidity, Marques says new rules are needed to ensure fair access to information. "Dark liquidity is important for institutional clients because it facilitates their trading, but the SEC is trying to make sure we don't end up with a two-tiered market," he comments. "Overall, we think what is being proposed is constructive, and within that framework, we think our algos are well positioned to deliver that liquidity in an intelligent way that minimizes market impact and information leakage."

Marques, who earned a Ph.D. in physics from the University of California, will bring a quantitative perspective to the problem. "Part of what we do is to quantify the trade-off between executions and execution quality in both bright and dark markets," he says. "We can show the clients what the benefits are and segment it even finer based on the kind of counterparty on the other side of a dark trade."

According to Marques, Deutsche Bank will work to develop smarter strategies in every class of algo. "Whether it will be VWAP or arrival price, dark liquidity is a key component of algorithmic development," he relates.

But dark algorithms will not be Marques' only focus this year. In addition to monitoring events in the dark pools space, Marques says, he also is watching closely developments in sponsored access. "We're generally supportive of the proposals that are out there related to having the broker-dealers take responsibility for their clients' actions," he reports. "It won't change the way algorithms work, but it will impact the DMA space."

Another trend that's hard to ignore is high-frequency trading. While there is a lot of negative noise about high-frequency traders in the market, they are serving as liquidity providers, assuming the role historically filled by specialists, Marques asserts. He points out that Deutsche Bank provides tools that allow the liquidity takers -- institutional investors -- to compete on equal footing with the liquidity providers -- the high-frequency traders.

"We have low-latency platforms and smart algorithms that enable clients to be competitive," says Marques. "We offer clients the opportunity to trade on par with those liquidity providers. We have the same data feeds, the same low-latency platforms, the same [colocation] facilities as the best of those guys, and we incorporate all those tools in our algorithms to level the playing field."

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

Register for Wall Street & Technology Newsletters
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.