Internalization & Matching

Internalization

The benefits of internalization are significant.

Order flow internalization allows our clients to reduce transaction costs – as broker, exchange and clearing fees effectively disappear.

Most importantly, as the flow concentrates in one place, the desks in charge benefit from seeing all the flow, and they can extract quantitative systematic trading strategies across multiple asset classes. These desks can be more competitive, show axes to clients, gain market share over time and increase revenues.

As well, a Central Risk Book (CRB) axe may be fed to other divisions of the bank to reduce risk and increase revenues. For instance, cash equity axes can be used to skew market making in structured products, warrants or options.

Main functionalities:

Order matching
Pricing
Configuration: spread and size obligations
Quotes publication
Hedging (auto and basket hedger)
Position and risk monitoring

Matching

Horizon’s Internal Market is a matching engine that offers a wide range of features, so institutions can build a trading venue, gathering quotes and orders from multiple entities:

Continuous trading with orders and quotes
Standard order types and validities are available
More trading workflows are possible: Block Trading, Request-For-Quote, Request-For-Execution
Trading phases to set the trading hours and enable or disable on-demand trading of a range of instruments
Exhaustive user rights and trading limit capabilities can be set for a single user, a group of users, a single instrument or a group of instruments
Market data broadcasting: orders can be entered in FIX and trade reports can be published in FIX

Reporting

Pre-trade transparency

Publication services can be plugged into Horizon’s Internal Market to publish quote information and trade reports in real time to an authorized APA.

Best execution reporting

Reports relating to execution quality on Systematic Internalizers have to be produced by institutions. Horizon’s platform stores, in dedicated databases, information such as timestamp, price, execution venue, execution status, offering a consistent source for building execution reports.