You have been approached by a client to design trading algorithms. The goal is to buy 100,000 shares of a reasonably liquid ASX-listed stock XYZ, which has an average daily trade volume of 500,000. (8 marks)

a) Describe a uniform time weighted average price (TWAP) based trading algorithm that you would put in place to complete the buy order in one trading day. Discuss one drawback with this strategy. (4 marks)

b) Describe a percent of volume (POV) based trading algorithm that you would put in place to complete the buy order in one trading day. Discuss the information you would require in order to implement this strategy. (4 marks)