Broker Selection for Quants: Checklist Not Coffee Chats
Picking a broker by rapport is a shortcut to slippage. Objective metrics keep selection honest and prevent “friend deals” from eroding performance.
A structured evaluation of infrastructure, cost, and policy support reveals who can actually deliver fills when the market is moving, not just smooth talk on a sales call.
Why it matters
Brokers sit between you and the market. Misaligned incentives, overloaded systems, or weak risk controls can turn a good strategy into a costly experiment. Treat broker selection as a technical procurement, not a relationship exercise.
Common mistakes
- Choosing based on fee schedules without testing execution.
- Ignoring how brokers handle outages or throttling.
- Skipping due diligence on policy enforcement.
Implementation steps
Set evaluation criteria
Define metrics for latency, fill quality, and risk features before demo calls begin.
Run pilot trades
Execute small live orders to test promises against reality across venues and times of day.
Review agreements
Ensure contracts spell out service levels and API deprecation notice periods.
LiquidityAI tie-in
- Benchmark reports compare broker execution in real time.
- Policy templates evaluate risk controls pre-onboarding.
- Alerting highlights venues that underperform expectations.
Case sketch (composite)
A fund evaluated three prime brokers. Pilot trades revealed one broker’s hidden throttling during volatile sessions. Selecting the second broker improved average slippage by 5bps and avoided mid-year outages when traffic spiked.
Takeaways
- Objective metrics beat soft preferences.
- Pilot trades reveal gaps that slide decks hide.
- Contracts should codify expectations around uptime and policy.
LiquidityAI provides tools and education for systematic trading. This article is for informational purposes only and does not constitute investment advice. Trading involves risk, including possible loss of principal.