Electronic broker Instinet has launched a 'stealth order management algorithm', called Cobra, designed to offload large stock orders while leaving the spread unchanged.
Instinet says the algorithm performs like a "seasoned trader" and will take into account a stock's historical quoting trends to determine the best execution point, making the trade largely undetectable by the market.
The Cobra algorithm, which is available via Instinet's Newport and Trading Portal front-ends, allows traders to choose among four different execution styles — passive, normal, aggressive and super aggressive.
Mike Plunkett, president, North America, Instinet, says the algorithm will automate normal trading patterns.
"While there are certainly scenarios where people need algorithms based on ultra-sophisticated mathematical models, there are others where a trader essentially wants an algorithm to automate his normal trading behaviour," he adds.
Instinet says the development of Cobra was prompted by the success of its BlockPeg algorithm, which was introduced in the summer of 2005. Replicating trading techniques that traders use in the OTC market, BlockPeg enables passive "pegging" size-contingent order prices and discretionary pricing for the trading of NYSE-listed stocks.