Mostly… fixed income and cross product eTrading

January 29, 2008

2007 – year of consortia

Filed under: 2015, etrading — holky @ 12:39 pm

A consortium is an association of two or more individuals, companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or pooling their resources for achieving a common goal.

Well 2007 was certainly the year of the consortia. Everywhere you look, banks pooling their resources for participating in a common activity or to achieve a common goal. 

And with Project Rainbow now on the horizon .. we see that 2008 is continuing the theme …
consortia2.gif
But what are the common goals that are sought?

The short term appears a defensive move in a landscape changing dramatically because of regulatory change –  the banks individually backing many/all horses in order to remain agnostic over choice of venue that business gets executed (until you start declaring you actually do have a preference), forcing exchanges/venues into lowering their costs … all of which of course appears to be working, though what cost of those venues countering with diversification into markets they previously didnt touch?

For the longer term do you have to start joining the dots between the consortia?  As and when the products cross over into another asset class, something that is typically managed in a separate silo in the sellsides, then those sellside representatives around each board table need to be there to execute their firm-wide strategy for the venue in question, rather than a product-silo specific view.  So will Tradeweb/Fusion plans to venture into Equity drive us down the road of a Fusioned MarkIT Boat Tradeweb ?  Or will MarkIT or Liquidity Hub turn Turquoise at any point?

Or is the only genuine end game for all of this wise investment just the exit strategy to sell any shareholding at a higher price than you paid?

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2 Comments »

  1. Hmm.

    Would be good if everyone could get their head around the idea that imposing a vertical silo based approach is part of the problem and NOT part of the solution.

    If brokers worked out that we just want one FIX connection per broker for everything order related pre and post trade (equities, equities PT, equities algos, fixed income, futures, futures algos, all with FIX allocations). And the vendors could provide that system.

    And – brokers – for crying out loud quit touting these cr*ppy front ends with snappy names (autoXplusport???) and just FIX enable the whole shooting match.

    And buysides – please, start to realise that you have to write cheques and pay bills – a quality connectivity landscape costs real money. Some buy-sides seem to think that they just get the sell side to pay for everything. Der! It’s the buy-sides money – they are just ripping you on comm!!!

    Not quite a rant, but I do wonder how many people who work in Electronic Trading actually understand both sides of the market and realise that the “received wisdom” is so often wrong….

    Just a bit of devils advocate now. An elephant is a horse designed by a committee. What on earth is a connectivity system designed by a consortium????

    Comment by John Greenan — January 30, 2008 @ 2:51 pm

  2. Project Rainbow launch is in finextra and indeed elsewhere today.. says the seven broker-dealers are Barclays, Deutsche, GS, JP Morgan, MF Global, NewEdge, UBS … a different list to the efinancialnews thing previously (no, i havent updated the table). Apparently the group formed in April 07, is now thought to be “close” to selecting a technology provider for the platform, and has lined up an interim chief executive.

    Comment by holky — February 6, 2008 @ 4:14 pm


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