The securities arm of Canadian Imperial Bank of Commerce, already the busiest stock-trading shop on Canadian markets, is trying to stay ahead in the constant technology race that dominates the share trading game by rolling out a system to handle orders.
CIBC is introducing a stock trading engine that it says will provide faster buy and sell transactions while adding risk filters to comply with new regulatory rules.
The system will process all the share trades that CIBC handles, no matter the source. Everything from a 100-share retail order to a 100,000 order from a mutual fund will be processed through the new system, which CIBC has dubbed CORE, which stands for Central Order Routing Engine.
That’s a contrast to the set-up at some firms where there are different systems for handling trades from different sources.
Trading volume in Canadian markets has been doubling every year over the past five years, with traders demanding more speed from their brokers. That has put pressure on brokerage firms to keep adding new technology.
“All of our order flow benefits from the engine,” said James Beattie, who heads equity trading at CIBC.
The set-up, which took more than two years to design and build, sends the orders to the market with the best price, but not before checking to ensure the order is appropriate for the client and complies with trading rules.
“Ms. McGillicuddy in Fort Saskatchewan gets the same level of access and better price as the speed sensitive trader,” said Thomas Kalafatis, a senior trading executive at CIBC who is responsible for clients who focus on electronic trading.
Regulators have put more onus on brokers to ensure that even the fastest automated orders generated by computers are checked to ensure they are proper. To comply, CIBC added a layer of filters that check the orders as the flash by, even looking for so called “fat finger” orders mistakenly entered by traders.
CIBC has been testing the system with some clients already, but decided to bring it to all clients after seeing how it did in the ups and downs of the markets in early August.
“The performance last week was impressive enough that we felt it was time to roll it out,” Mr. Kalafatis said.