UAT said it received a patent for technology that connects external money managers to computing platforms in real-time.
The award, U.S. Patent 7,809,632, is for UAT's HiLo Engine, creates a single integrated real-time communications network between computing systems that fund companies have set up for use by subadvisors and the systems used by those subadvisors, who typically are external money managers responsible for managing certain funds or types of securities operated by or held by the fund company.
The HiLo engine conducts a real-time, rules-based analysis of the expected market impact of all money managers in order to assign discretion over execution of an order to the money manager or sub-advised platform, UAT said.
Patents for the HiLo Engine have also been filed in 38 other countries. This is the first patent for UAT's UAT System, a technology platform developed to improve operations in the $3.5 trillion externally managed and sub-advised market. The HiLo Engine operates in real time and also enables real-time governance reporting and pre-trade compliance oversight over all money manager orders. "The HiLo Engine is what enables the UAT System to provide a real-time solution to the sub-advised market, the first time this has ever been possible," said Tom Warren, UAT's President. "Prior to the invention of this engine, the best reporting you could hope for was a review of trades the day after they were executed. The HiLo Engine makes it possible not only to review trades in real time, but to stop a trade that does not meet compliance review. As a result, sub-advised platforms can now properly comply with existing SEC requirements for supervision and prevention of violations by external money managers." The HiLo Engine works by capturing orders in real time through a single integrated communications system as money managers continue to enter orders into their current trading systems.
All orders are automatically routed through the UAT System including the HiLo Engine, where it is determined if the order has a high expected market impact or low expected market impact.
High-impact orders are routed back to the money managers to "work" while low-impact orders are routed to a low-cost, high-speed execution network to save brokerage costs.
"Large orders that have to be worked are routed back to money managers, while smaller trades are immediately executed, getting the best price available on the market," said Allan Chiulli, UAT's CEO. "Aside from providing a real-time, finger-on-the-pulse of what all external money managers are doing throughout the trading day, the HiLo Engine enables low-cost trading of easily executed all-electronic orders." The UAT System is designed for public and private defined benefit plans, defined contribution plans, mutual funds, not-for-profit funds, variable insurance products, bank trust groups, endowments and foundations.
