Mostly… fixed income and cross product eTrading

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.

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13 Comments »

  1. Ah Thinkfolio…… You know, if I ran an oms then id get the account managers schmoozing the sellside etrading guys more .. Maybe not quite so much as Bloomberg and Tradeweb and MarketAxess and Reuters do (at least not yet), but I suspect many OMS aren’t even properly on fixed income sellside radar – other than Charles river and LatentZero who have historically often had stalls at fixed income events. (remember to tie this to the final point on this comment when you get there)

    AUTEX – ah this has never really gone anywhere for FI (I first talked to these guys ~ 5 years ago about putting fixed income iois out with our equity ones) …… I wonder if this is the way forward for Thomson or they should keep fixed income separate from the emotional baggage of equity iois (think misuse of ioi) and have a specific axe distribution network? (even if its largely the same under the hood). Just make sure the fixed income one is executable and bi-directional.

    CRD – oh yes – go get em tiger Thomson!

    On the final point of being responsive to client requests- well, first of course you have to identify who the client is. So is the client the buyside who has bought their desktop gui from you, or the sellside who is paying something to distribute via the platform(s) in question? And who gets priority if the requirements compete?

    Comment by Holky — September 27, 2007 @ 5:53 pm

  2. The client of a buy-side oms vendor is the buy-side. All of the brokers pay the buy-side OMS vendors to perform integration/comformance testing but that’s a non-sustainable revenue stream and business model. All of this should be FIX based and therefore utterly standard.

    This is a debate I have had with a number of buy-side OMS vendors and they are slowly coming round to the idea…

    And once FIX ATDL has proper buy-in then there will be no excuses….

    Comment by John Greenan — October 1, 2007 @ 11:22 am

  3. That will be music to the ears of those sellside who have previously had discussions involving basis point charges on a trade because the oms is hosting the dealers algorithms.

    And good news to buyside who will then not be competing for strategic or long term develoment of the platform against sellside interests.

    Comment by Holky — October 1, 2007 @ 5:10 pm

  4. […] do you want an OMS for? Having been pretty much bang on with last post about Thomson .. Where next?..  here’s more from […]

    Pingback by What do you want an OMS for? « Mostly… — October 15, 2007 @ 3:51 pm

  5. Very interesting triumvirate, IIRC Thomson have already dabbled in the buyside OMS space with Open Trader/Oneva haven’t they? Not sure if they have the appetite for applications, seem to want to concentrate on data.

    Comment by oxymoron — October 21, 2007 @ 9:01 am

  6. But Oneva never seemed to go anywhere did it? Did anyone ever use it?

    Comment by John Greenan — October 22, 2007 @ 1:22 pm

  7. Cazenove FM used it at some point i’m sure.

    Comment by oxymoron — October 24, 2007 @ 12:28 pm

  8. If Caz did use it I think it was not for long – I’m pretty sure that LZ or CRD are in at Caz now…

    Comment by John Greenan — October 25, 2007 @ 7:52 am

  9. It was there for a good long while, but as you say has probably, some would say inevitbly,been replaced by one of the usual suspects.

    Comment by oxymoron — October 25, 2007 @ 8:52 am

  10. Not FlexTrade – Tethys!

    Comment by MrMan — October 26, 2007 @ 12:01 pm

  11. Tethys is a fantastic bit of kit – if I ran search and selection for a stat-arb hedge fund it’d be on the short list. I’d also put them (and have done so) on an institutional buy-side long list.

    I’ve been told that Tethys is not for sale. It has a modern architecture vs Flextrade but not really set up for institutional buy-sides (one can say the same about every EMS).

    Comment by John Greenan — October 26, 2007 @ 12:44 pm

  12. Hmmmm.

    It’s the Thinkfolio 10th birthday party on July 7th.

    Will they have another announcement to make as well??????

    It’s been said that the lovely chaps at ThomsonReuters have decided to open the chequebook…

    Comment by John Greenan — June 24, 2011 @ 12:05 pm


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