Mostly… fixed income and cross product eTrading

October 14, 2011

Fidessa vs Sungard…the endgame begins?

So, it’s now public information that Citi have signed up with Fidessa to deliver a global solution:

“Fidessa will provide Citi with an order management and distributed low-latency execution platform along with BlueBox, Fidessa’s integrated algorithmic trading engine. The Fidessa solution will also deliver risk management functionality, comprehensive market data and a global order routing service. “

http://www.automatedtrader.net/headlines/91529/fidessa-to-deliver-global-derivatives-platform-for-citi

So, a big bank takes a chance on Fidessa to deliver a comprehensive futures platform.  Citi acquired a lot of people to build up this business and they are looking to deliver something impressive.

So – what  has that got to do with Sungard vs Fidessa?

Well, remember that Fidessa started by using GL Trade gateways to markets until they built up EMMA.  Fidessa built up an equities business and they never really hit the sweet spot in the futures space.

Now they have a top tier client that has publicised this decision.  So, what happens next?  The existing GLTrade client base now sit down and think “hmmm, if Citi can do it, so can I, get Steve Barrow on the phone”.

I really want to quote Sir Winston Churchill here, but I will resist the temptation.

Now, what do Sungard do?  I refer the honourable reader to my post of some moments ago – link here

http://mostly.wordpress.com/2011/08/15/sungard-gltradebrassfront-arena-what-now/

August 15, 2011

Sungard: GLTrade/Brass/Front Arena – what now?

Filed under: etrading, FIX, Nuts and Bolts, OMS / EMS, STP — Tags: , , , , , , , — John Greenan @ 2:37 pm

Bid for Fidessa?  About £588 million market cap at £16/share. Throw on a premium – say 20% to take it to about £700 million.

Why?

A double or quits bet on the front office trading systems market.  The GL acquisition cannot be going well; why not scoop up the main competition?  Price earning of about 20.  For year ended 31st December 2010 Fidessa made a £40 million profit. That’s a decent return on equity in a downturn and beats the hell out of a bank account.

Massive synergies possible – basically you just shut down all of GL Trade and Brass and most of Front Arena.  Keep the Clearvision product offering. Integration costs will be high – closing down the Tunisia and Serbia development sites and pretty much all of the Paris based staff.

Do I expect Sungard to do it? 20% chance at best. But if you cannot beat ‘em, buy ‘em! At the moment Fidessa are eating their lunch on a drip-by-drip basis.  This would be a transformational acqusition in the true sense, since it would transform Sungard from a dying sclerotic business to being Fidessa+a few bits left from the Sungard Trading world.  Just have to make sure that the staff retention packages are enough to keep the Fidessa “magic/inner circle” onboard but not to much to let them get lazy.

Disclosure: I know people at both Fidessa and Sungard, I have not discussed this article with them and have no information other than market knowledge.

March 21, 2010

Google eTrading

Filed under: 2015, etrading, FIX, Nuts and Bolts, OMS / EMS — holky @ 9:15 am

With Google hiring the former global head of FX at Bloomberg you can sense the anticipation that this could be the point that Google steps up with a Bloomberg-challenging capital markets offering.

While there is plenty for the market data lovers to expect from this, I wonder where etrading functionality sits in the roadmap, and whether those plans are all d-i-y within Google or whether there are any exploratory conversations going on with guys like marketcetera about creation and distribution possibilities regarding getting that Google OMS going? I know that if I was pushing FPL, I’d be all over Google to ensure FIX is high on Google’s radar as the api of choice for orderflow, as the wave of adoption that would create would be enormous.

March 12, 2009

Executable Bid Lists, eh

Filed under: etrading, Nuts and Bolts, OMS / EMS — holky @ 8:12 pm

Is that MarketAxess “Inquiry lists for financial products’” anything like executable bid lists or something like the iois stuff here as previously posted?

August 1, 2008

What do I do with this?

Filed under: OMS / EMS, Uncategorized — Tags: , , , — John Greenan @ 6:44 pm
Picture the scene…
 
You are a high level exec at Sungard.  The GLTrade boys have agreed to sell up and you soon get control.
 
What do you do with it?

July 17, 2008

The Future of OMS

Filed under: etrading, FIX, OMS / EMS — holky @ 8:35 am

TowerGroup says Spending on OMS will grow in dollar terms and compare favourably with other buyside spending in terms of (apparent) priority. In terms of product, the research indicates that growth in the OMS sector is being driven by three key areas, and in addition to Weallth Management functionality there is;

– Emerging Markets – With both the US and UK OMS markets saturated, international markets – specifically continental Europe, the Middle East, Asia including China and India, and South America – represent the strongest growth opportunities for OMS providers.

With FPL also putting a flashlight onto Emerging Markets too (here) – I’d hope that any drive made by the OMS/EMS vendors will include electronic trading from the off, building the e-trading workflows for the local markets at the same time as the functions to cope with the internal order management and regulatory nuances for the region/market in question. We shall see.

– Derivatives – Supporting derivatives is a critical requirement for an OMS. Derivatives represent a unique opportunity for OMS vendors to extend their franchise beyond traditional OMS functions and into new territory, including valuation, pricing, and risk management.

Here Charles River and Tradeweb are in the news announcing the launch of a fully-integrated, end-to-end solution for post-trade processing of OTC Derivatives; IRS (U.S. Dollar, Euro, and Sterling), CDS (CDX, iTraxx, single names, and tranches), which is clearly really well timed and with definite potential as a workflow enhancer (and while the press release understandably does not mention trades executed in non-Tradeweb electronic venues – I presume these would be fed in the same way as voice trades so this proposition could cope with all of the client’s trades in these products?)

One thing that the TW/CRD press release did also mention, is about point-to-point broker connections…

In addition, a new Direct Dealer Inventory feed in Version 8.2 enables buy-side traders to establish electronic point-to-point broker connections and receive available fixed income inventory directly into Charles River IMS – electronically matching orders and helping traders successfully execute on inventory opportunities.

…which doesn’t specifically mention electronic execution via these connections, but does put another foundation in place for a single platform.

July 2, 2008

Fidessa on sellside, Charles River buyside

Filed under: etrading, OMS / EMS — holky @ 2:54 pm

For those of you going shopping…. Bobsguide tells us that Fidessa is voted the best sellside OMS for 2008 (overtaking Sungard BRASS). We already knew that Charles River was voted best buyside OMS.

April 28, 2008

Charles River rules … ok?

Filed under: etrading, OMS / EMS — holky @ 2:50 pm

Bobsguide says that TradeTech 2008 Names Charles River IMS Best Buy-Side OMS for Second Consecutive Year … Of course thats equity tradetech .. or at the very least now there isnt a FI one, “primarily-equity” TradeTech, though surely nowadays that’s academic; there is a single cross-asset-class buyside opinion on what the best OMS is?

April 21, 2008

Institutional Buyside FI etrading

Filed under: 2015, etrading, FIX, Nuts and Bolts, OMS / EMS — holky @ 12:03 pm

Another post from John Greenan…

What’s the future for Institutional buy-side Fixed Income trading?

Within the e-trading world a lot of the emphasis has been on the sell side with different firms and strategies (Liquidity Hub, project fusion and so on).  One aspect that does not seem to get as much attention is the buy-side.  Typically a big institutional buy-side will have an OMS like Charles River, LatentZero, MacGregor etc.  On top of that will sit one or more of MarketAxess, Tradeweb, BondVision and so on.  The model that these firms impose is one of FIX connectivity into the EMS but no option of end-to-end FIX connectivity from OMS to brokers.

As this market place matures it’s difficult to see what the future direction will be.

I’d like to propose one model.

Buy-side EMS connects via pure FIX 4.4 to a limited number of brokers.  A RFS process starts to request two way quotes in size for a list of instruments that the firm is interested in.  These quotes are combined into a synthetic order book – such that the buy-side can see ‘market-depth’ for instruments of interest.

The strength of this solution is that there is no longer a need to look at proprietary systems, the streamed quotes can be used for monitoring, it’s pure FIX, brokers can be plugged in or dropped without much fanfare.

The weakness is that the first buy-side to implement this may have to build the system.  Potentially it’s a very resource intensive system, depending on the number of quotes, brokers and instruments.

What are buy-sides doing in this space?

March 18, 2008

Bondvision and LatentZero

Filed under: etrading, FIX, Nuts and Bolts, OMS / EMS — holky @ 6:08 am

I see in Finextra that BondVision is partnering with Fidessa LatentZero (Minerva).   Clients will be able to ‘auction’ their business to the best bidder either outright, or by switching with up to five dealers online …. which i presume means singledealer orders and rfq?

I recall way back towards the tail end of 2005 (?) a Bondvision announcement about the FIX pipe being opened. 

LZ point to point etrading gets a step closer?

February 18, 2008

A Single Platform

Filed under: 2015, etrading, Nuts and Bolts, OMS / EMS — holky @ 11:40 am

SIFMA Fixed Income eTrading Survey 2008 results show 85% of buy-side respondents expect to be using a single platform for all of their institution’s wholesale electronic trading activity within the next two years.

At SIFMA we heard that the future is not all multidealer venues. Indeed, singledealer platforms are still a serious consideration for the majority of attendees where there is a functional benefit.  We also heard that buyside do actively want competition in the ECN/vendor space – if only so the functional landscape does not stagnate.

So answering the question posed in Tales from a trading desk, buyside expectation and indeed their desire would appear that the single platform in question is not one of the vendor or dealer platforms, instead it is their own desktop (ie their single platform), and that this platform is able to aggregate their view of liquidity into a single view of the market, from where they trade. So OMS or EMS depending how you measure it.

My panel ( this one of the only snippets I heard :-( ) concluded that 2008 is back to basics and so time for the foundational work to be done so we are ready to benefit from the new venues and landscape changes that the dealer consortia are driving.   In an environment where fixed income etrading budgets are broadly the same as last year (*), we need to be specific about where the right place to spend is. So in terms of back to basics, spend your 2008 money on the implementation of your OMS and then [...through 2009] plugging it into the liquidity pools.  

Which pools do you connect to though? Well, once buyside have got the hang of plugging their OMS into fixed income liquidity pools, we’d be mad not to expect a much stronger drive from buyside and sellside to hook up direct in order to handle bespoke orderflow/information flow, or perhaps a move towards something more cross-product.  Sure, this is a relationship enhancer so perhaps only really relevant for top tier clients, but how long will critical mass of connections into say one of the fi venues want electronic order flow constrained in some way just to match what is possible via the venue’s GUI ?  Will those venues constrain the types or order that they can process, or will they move towards a more generic orderflow routing instead?  … though perhaps that’s a question for 2010 and beyond.

(*) assuming survey of SIFMA attendees is indicative of the market as a whole. The other options were that budget was materially less or materially more than 2007.

January 31, 2008

OMS order routing on the up

Filed under: etrading, Nuts and Bolts, OMS / EMS — holky @ 8:48 pm

WSJ says that leading asset managers — including AIG Global Investment Group, Deutsche Asset Management, Pioneer Investments, TIAA-CREF and State Street Global Advisors (SSgA) — have participated in an extensive trading survey to benchmark themselves against their peers;  and while the first survey conducted in 2006 examined risk, trade strategy, technology, organization, broker valuations, workflows, fixed income, speed and liquidity, for 2007 the hot topics were trading policy, trading strategy, broker valuation, technology and fixed income (“Everybody was pretty much in the same position with DMA [direct market access], speed to market and liquidity, so we minimized the effect of that and focused more on broker relations, where people wanted to spend their time”).

Results showed OMSs have improved is their ability to automatically route orders – with 80% of firms in 2007 saying they have the ability to automatically route orders from their OMSs to external counterparties, compared to less than 50% in 2006.

November 30, 2007

MarketAxess still 0, Tradeweb 1?

Filed under: etrading, Nuts and Bolts, OMS / EMS — holky @ 9:40 am

As Techrockies tells us (also finextra), MarketAxess has bought “substantially all the assets of” Trade West Systems, a Utah-based provider of pricing, execution, connectivity and compliance products for the fixed income and equities markets. 

While the announcements seem to focus on ProOMS – which is the “Connectivity solution using XML, FIX or other protocols to transfer data between trading or other applications” , their product range (as on TWS site) includes a thin, ultra-thin, or web-based client front-end supporting real time updating fixed income and equity inventory.

Does the fact that the news articles are not mentioning a new & improved MarketAxess client gui on the way mean that the platforms are acknowledging the writing is on the wall for them having their own gui, or at least that the critical mass of buyside will in the forseeable future be integrating liquidity venues into their own desktop (no real surprise, eh, other than it’s taken quite so long to get there?). 

Of course if that’s the case then yes there are advantages in being able to offer easy integration – and an acquisition such as this could make a great deal of sense, but wouldn’t MarketAxess still be missing a big trick?   Tradeweb are talking the talk of combining [tradeweb] fixed income and [thomson] equity offering at the customer desktop.  If MarketAxess have really bought some technology (assuming it’s good -anyone know?) that lets the dealers that can get their fixed income and equity inventory out to customer desktop now, shouldn’t MarketAxess deploy a better gui now (perhaps especially as the existing MA gui is so often criticised), and try and use this genuine product improvement to keep the hearts and minds of its customers?  …offering equity (or whatever) as a coming-soon.

Once buyside really start integrating Tradeweb into their own desktop, why would they also need Marketaxess?  Fusion can certainly be spun to make a good reassurance that TW will have dealer liquidity, but even making the assumption that enough of the right dealers continue to provide same credit liquidity to each venue, if buyside have a Tradeweb connection just for govvies anyway, and the Tradeweb credit connection is at least adequate, and you’re not emotionally attached to the MarketAxess gui which you’ve built your trading workflow around … if there is a material running cost for the MarketAxess connection, then why keep both? 

November 8, 2007

Charles River’s FIX Network

Filed under: etrading, FIX, OMS / EMS — holky @ 4:19 pm

Finextra article shows CRD are talking up their FIX network … no real or major news, but interesting figure is the claim of more than 90% of Charles River clients using Charles River Network for electronic trading.   Also talking up the CRD cross product / multiple asset class point to point architecture;  including algorithmic trading, FIX allocations, fixed income, futures, options and FX

October 30, 2007

Project “Utility”

Filed under: 2015, etrading, OMS / EMS — holky @ 10:20 pm

Another question from roving reporter John…putting me to shame in terms of the number of serious posts recently.

So, we live in a world where Investment Banks compete fiercely in most areas (a good thing) but also collaborate (ie Boat, Turquoise) when appropriate. And that’s sensible, horses for courses. At the moment the sell-sides either buy or build their connectivity infrastructure and most have a mix of Fidessa, ORC, GL Trade, Cameron, TransactTools, Javelin (NYFIX) Appia and so on. On the buy side in the last five or six years there have only really been two choices – Charles River or LatentZero. And that lack of competition is a bad thing.

So, a modest proposal. Why don’t the heads of connectivity from Morgan Stanley, Merrill Lynch, Credit Suisse, Goldman Sachs, Lehman Brothers, Bear Stearns and so on stop buying EMS vendors and actually set up a broker neutral OMS/EMS. Neutral by design and by ownership. Genuinely FIX compliant and given to any buy-side that wants it – client of the owning banks or not. Charge it out on a rental model – a modest rental per dealer per month – maybe say $1,000??

Maybe even look to Open Source it for the hedgies and the funkier chaps with more tech smarts…

Or is that what the $180million investment in Thomson Tradeweb was all about?

October 15, 2007

What do you want an OMS for?

Filed under: etrading, OMS / EMS — holky @ 3:51 pm

Having been pretty much bang on with last post about Thomson .. Where next?..  here’s more from John.

Here’s a question that seems to be missed in the current market, where all talk is of OMS, EMS, OEMS and any number of combinations of an OMS and many EMSes. Let’s look at the history of the OMS and it’s younger brother the EMS and see what’s missing….

The modern OMS is generally regarded as being the offspring of Seth Merrin with Merrin Financial. The OMS became popular as a way to provide a system for the front office as a counterpart to the widespread usage of back office systems such as HiPortfolio, Pacer and so on. Originally the OMS simply replaced paper tickets; it provided a replacement for the timestamp and allowed dealers to store execution information based on telephone broker relationships and dealing.

At the same time as the OMS started to come into widespread usage so did FIX. The co-existence of the two is well documented – there is now no serious OMS that does not include FIX connectivity. But this parallel development was the root cause of the problems that are now facing the buy-side OMS world. Simply put, the buy-side OMS vendors had to have FIX in order to get through the RFI/RFP/ITT cycle and the buy-sides IT departments knew that they had to have a convincing story of being able to “do FIX”.Vendors scurried around for a story and often came out with the idea of partnering with a lead client that would be the first to go live with FIX – as the vendor coded up requirements from the buy-side. Alas it was a case of the blind leading the blind. The buy-sides had very little experience or knowledge of FIX and the vendors had even less. After several years of catching up the vendors are still behind the market in terms of functionality and the market is taking great leaps ahead with Algos and dark pools proliferating.

The problems of actually implementing FIX within a buy-side are well known by anyone who has done so – the micro level bugs and issues are compounded by a lack of testing infrastructure at the vendor and a lack of understanding of the workflows associated with electronic trading. So what happens in the larger buy-side? The course that many large buy-sides are taking is to buy an EMS and hope to remove the connectivity piece from the OMS – rather than put right the issues, give the problem to another vendor (or part of the same vendor). Let’s back track here a little. What is an “OMS”? Generally it’s actually three functional pieces and a shared data layer sitting upon a common database or real-time platform.Portfolio modelling / rebalancing / order generation – used by the Fund Manager Compliance – used by Fund Manager to ensure orders are compliant Order management – used by the dealer to keep track of orders sent to brokers by FIX/telephone/spreadsheet

Now, if a buy-side pulls the order management and dealing function out of the OMS and has an EMS perform this function then what does the old dealer order management piece do? In an EMS world it’s not unfair to say that the dealer piece is acting as an expensive piece of middleware – sitting between the Fund Managers and their modelling/rebalancing/order generation and compliance functionality and the EMS with it’s connections to brokers for execution.

So, ask the question: If you were a big buy-side looking to make a great leap in technology – would you rip out the dealer order management function and simply use an EMS at the front end?

Which firms are best placed to take advantage of that shift? And who can take advantage of their incumbent position to bend the will of the market?

There are a lot of unanswered questions in this market space but it’s one where vendors are engaging in a high stakes game to ensure that they come out on top. Right now, it’s a great time to be in a buy-side working on connectivity as the vendors in the market are jousting for business and are willing to engage in partnerships and risk sharing that was not on the table a few years ago.

September 27, 2007

Thomson … where next?

Filed under: 2015, etrading, Nuts and Bolts, OMS / EMS — holky @ 8:28 am

A modest proposal to Thomson FinancialSince the Reuters acquisition – written by the “mostly” roving reporter John.

I suspect that Thomson is suffering from a slight dose of corporate indigestion. In a fast moving world can Thomson wait before making their next move? Let’s just suppose that they decide to become more of a force in the buy-side connectivity space. There are few options available out there but there is one strategy that I think could completely overshadow the Fidessa acquisition of LatentZero.

There are several parts to the strategy:

Step One

Make a strategic investment in Thinkfolio. It’s the leading buy-side Fixed Income modelling tool. The management are strong, experienced and retain stakes in the business. Don’t buy the whole thing – give them enough money to motivate but not too much to reduce incentives.  – Can this be done at a reasonable price? Absolutely.

Step Two

Take the Autex business unit and combine with Tradeweb.

I have heard rumblings that this is in progress anyway. It’s a good move.

Tradeweb is ugly as sin to look at but it’s a product that offers genuine value to the buy-side dealer. Roll that into Autex. Why? Try and get Tradeweb into more shops that may be mainly equity but do have Autex. By now the big players are using Tradeweb so it’s mopping up the remnants that is left.

Can this be done at a reasonable price? Reorganisation within the firm – of course.

Step Three

Buy Charles River Development. This is a no-brainer really. CRD have moved beyond their roots in the US to being a global business. But as with most buy side independent vendors they lack critical mass – there is not enough strength in depth. They have been in play for a while as an acquisition target so why not make Lambertus an offer?

Can this be done at a reasonable price? Probably.

Step Four

Buy Flextrade. This is the leading broker neutral EMS. Functionally excellent. The firm has done really well to offer a cross product offering but the firm has a number of weaknesses. One is the technology: C++ on UNIX with X-Windows, in house messaging layer, in-house FIX engine. It can be argued that this could do with a refresh.

Can this be done at a reasonable price? Wildcard.

So what do Thomson do if they buy this mix of products?

1. Work on integrating Thinkfolio and Tradeweb – all FIX based but in an elegant integration.

2. Sell the other parts of the Autex/Thinkfolio/Tradeweb trinity to firms that have less than three in place (maybe not many new opportunities but worthwhile)

3. Get CRD and Flextrade to work on full functional integration

4. Look to provide the next generation of these products in an AJAX based front end (something like this)

5. Be responsive to client requests.

Disclosure (from the author, John) – I do not have any financial interests in any of these firms, I don’t own shares, options or any other instruments in these firms. I do know various people at these firms – this article is not based on any non-public information.

September 14, 2007

Multi-asset Portfolio Management Systems

Filed under: etrading, OMS / EMS — holky @ 7:54 am

Aite Group report says that multi-asset portfolio systems — those with the ability to process all types of assets including non-listed exotic instruments — are now attracting greater interest from buyers, as investment managers and particularly hedge funds, seek derivative product capabilities in line with their increasingly diversified strategies

 “Even if buy-side firms are not currently engaged in a high volume of over-the-counter trading, they are aware that down the road, a change may take hold,” said Denise Valentine, senior analyst at Boston-based Aite. “To that end, buy-side firms are querying technology vendors on their solutions’ ability to process these instruments today and in the future.”

September 11, 2007

fidessa/latentzero – why should you care?

Filed under: etrading, OMS / EMS — holky @ 5:11 am

Trader magazine looks at the fidessa/latentzero tie-up  here

Why do we in the fixed income space care?

Latentzero hooked up with fidessa because they needed a datacentre, a hosted offering, and a decent FIX connectivity hub – all of which fidessa have in spades. Fidessa see latentzero as a way to break out of their existing shape; a great presence among the UK equity market participants, but not so hot in Europe (kept at bay by GL) and even less of a footprint in the US.

Of course latentzero taking over more desktops pays dividends to fidessa in terms of getting their fidessa nuts and bolts onto the punters desktop….  and that’s where Reuters-Thomson and Bloomberg really need to watch out. Once latentzero-fidessa are on your desktop, why are you going to pay to get your market data through one of the current providers and also have to pay you tech guys to pipe that data into your desktop?

Yes were not talking about swaps or fixed income right now, but firms making big decisions about global licenses are surely more likely to side with a solution that on the face of it provides an absolutely nailed and integrated system for at least one product area (equity) and at least “talks the talk” of other products, especially if decent-name dealers are offering point to point distribution in those products in the (even if marketing speak) forseeable future….  Should we expect this to be adopted in spades if point to point means we are not so constrained by gui too (not transaction building blocks but breaks out of the existing constraints?)… What’s the alternative? Deploy a fragmented fixed income style environment of apps here and there and expensive desk jockeys rekeying things between them rather than really adding value somewhere else in transaction terms?

My unscientifically conducted “survey” reveals expectations are for latentzero to become the dominant part of the merged company over the next 18 months.    How are Bloomberg and Reuters-Thomson planning to fight this long term to stay on your desktop?

July 29, 2007

electronic dark liquidity

Filed under: etrading, Nuts and Bolts, OMS / EMS — holky @ 2:48 pm

FT says Lehman has boosted access to its own “dark liquidity” pool, offering to buy and sell shares that are hidden from the market, by installing an electronic access connection that is capable of linking with most order execution management systems (also EFN) – Lehman said that while its competitors were offering similar dark liquidity pools, it believes it is the only one allowing large institutional fund managers and hedge funds to access the pool directly [read "electronically"] without manually directing that order through a trader.

July 18, 2007

Dealing Systems Will Go Cross-Asset

Filed under: etrading, OMS / EMS — holky @ 5:58 am

Asset managers, investment banks and broker-dealers are losing revenue because their front office systems cannot handle the complexity of modern trading strategies, according to a TABB research report quoted in EFN. This says that the traditional structure of trading companies, with silos dedicated to particular instruments, “is slowly and surely disappearing” as the number of systems used diminishes.

Sellside companies are “beginning the process of aligning their businesses to reflect more accurately the needs of their biggest customers”, but the challenge is keeping pace with change. The report says the buyside is “approaching investing in a whole new way”, specifically that “They are using complicated, inter-related plans that expose them to securities outside of their traditional comfort zone, exploiting arbitrage opportunities across capital structures and achieving investment goals by using the most efficient financial instrument – or combination of instruments – to achieve the desired exposure, risk and reward.”

For this, desktop integration is the buyside traders’ top concern, ranking over liquidity or trading errors, according to Tabb, with the report saying it is the responsibility of the head trader to “balance all the desk requirements across the various silos” – relatively easy for smaller firms but becoming geometrically complicated for large sell side trading desks with multiple locations, multiple asset classes and multiple entrenched interests.

July 8, 2007

Order Routing Execution Services

Filed under: etrading, OMS / EMS — holky @ 8:13 pm

When the Pilot Stocks Phase of Reg NMS goes into effect the entire securities industry exchanges, brokers and market makers must be capable of routing orders for the 250 pilot stocks to most exchanges and ECNs under Reg NMS’ best price requirements.

Rather than build the necessary connectivity to all 10 required equity market destinations, many firms are turning to third-party vendors – and so far, the vast majority of exchanges have chosen Order Execution Services (OES) and Lava Trading (part of Citi Electronic Trading Solutions) to provide the connectivity and smart-order routing to sweep the various destinations.

With Lava believed to be using OES to reach some of the destinations, and the EMS vendors also using them for the ‘market connectivity’ they offer too, WSJ poses the question of whether too many eggs are now in these two baskets – OES and Lava…

June 29, 2007

OMS/EMS

Filed under: etrading, OMS / EMS — holky @ 6:44 am

As electronic trading causes a surge in market data volumes, and buy-side traders seek connectivity to liquidity pools, algorithms and exchange venues that are moving into multiple asset classes, there’s a rising demand on the buy side for execution management systems (EMSs) – says WSJ in an article about this years SIFMA conference

Many order management systems (OMSs) provide access to broker algorithms and operate order routing networks, but they are not as fast as the EMSs, industry sources say. While hedge funds that focus on fast executions across multiple destinations can make do with just an EMS, traditional asset managers still need the OMS, which they use to document trades, rebalance portfolios and handle everything from pre-trade compliance to post-trade allocations.

So the technology providers are pitching integrated global OMS/EMS solutions, taking various approaches to achieving OMS and EMS functionality in a single platform, including acquiring an EMS and merging the two systems, building an EMS on top of an OMS, or building an interface that can connect with third-party OMSs.

And the vendors are placing their bets what the buy side really want; a single OMS/EMS (Eze Castle-ConvergEx, Fidessa LatentZero, ITG Macgregor) or the flexibility to integrate with their favorite EMS (Linedata)

While equity/exchange trading getting its act together in terms of a single buyside entry point to ‘the market’ (regardless of how achieved – above), the status-quo for fixed income remains to use separate application per venue (tradeweb, marketaxess, rtfi, bloomberg, and so on)????

June 4, 2007

Multi-broker FI EMS….

Filed under: etrading, OMS / EMS — holky @ 4:12 pm

So Goldman Sachs has extended the functionality of its REDIPlus multi-broker execution management system (EMS) in Europe, so users in the region can now route orders to other brokers’ algorithms via their platform.  Joining the dots between this and my previous post on EMS for fixed income , when should we expect to see an EMS standing up and being counted as a customer-side desktop for Fixed Income?  

Of course this isn’t just dealers who can do this. While it seems initially a less likely outcome, how about one of the FI ECNs having the courage to acknowledge the competition in particular product sets where they don’t excel, and do the plumbing to let their GUI offer their customers a route into another venues liquidity…

Transaction Building Blocks

Filed under: Algos, etrading, Nuts and Bolts, OMS / EMS — holky @ 6:15 am

Again on the future of OMS/ECNs…  I saw a press release a while ago re ULLINK’s UL REACH thing that apparently lets sellside publish their algorithms to buy-side community so they are made available “instantly” (meaning without having to wait for a new ullink software release).

Why don’t the FI ECNs build their GUIs to support transactions being built from generic building blocks of functions and fields?  Build the equivalent of their existing etrading offering as the generic functionality using those building blocks, and then shift ‘development’ of anything over and above that to the sellside who wish to support a particular type of transaction. 

As long as dealers wish to support it (and so develop it), this removes the constraint that the ECNs place on what can be transacted on the platform. With the right building blocks could dealers support things such as customers electronically unwinding existing swaps once non-standard, or etrading butterflies and curves and so on ? .. the things some big buyside say they require before they will do any of their swaps business electronically.   In terms of value-add the ECN becomes “the library” of  core etrading functions as well as the connectivity between customer+liquidity provider – not a bad position to be in to ensure they remain in the future landscape.

As the OMS guys are already coding dealer-specific functions (algos) into their gui, if the ECNs continue to hard-code their gui-per and so constrain the product offering then where does that leave them in the future?

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