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. ”

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

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.


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.

October 21, 2010

What is an order routing hub for?

Filed under: FIX, Nuts and Bolts — John Greenan @ 7:46 am

Had a meeting with some interesting folks a little while back.

 A pet subject of mine came up, data mining based on real traded data.  Among other thin suggested a couple of things

A fuzzy logic based method to match up IOIs, ATs and real trade reports.  Regress them all against each other with appropriate lags and so on and provide a reporting tool to the buy-side to allow a buy side to assess the quality of the IOI based on historical trends.

 Why?  Well who actually looks at IOIs and thinks that they are real?  Same folks who believe in the tooth fairy?  But – the problem is structural.  The only firms who would have this data for a wide enough sample of buy and sell sides would be the order routing hubs.  And who pays their bills? The sell-side.  And who gets beaten up by this idea?  The sell-side.  Turkeys don’t vote for Christmas.   But it’s be fascinating to see the results of the analysis.

Anyone work for an order routing hub and want to comment?

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.

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.

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?

March 7, 2008

MarketAxess FIX future

Filed under: 2015, etrading, FIX — holky @ 7:26 am

Story in Finextra saying that MarketAxess has bought Greenline Financial Technologies .. and says the acquisition will expand its revenue base by adding equities and exchange-traded options, futures and commodities connectivity to its fixed income options.

“The acquisition of Greenline further broadens the range of technology services that we offer to institutional financial markets, provides a meaningful expansion of our client universe, including global exchanges and hedge funds, and further diversifies our business beyond our core electronic credit trading products,” says Richard McVey, chairman and CEO, MarketAxess.

December 12, 2007

FIX Protocol Limited

Filed under: etrading, FIX — holky @ 4:21 pm

You could interpret the message from FPL about state of the nation (well, state of the globe really) re FIX as being great; FIX sorts out all of the etrading problems. FIX can cope with etrading in any asset classes anyone could ever dream of. FIX handles market data (whether requiring FAST or not). There are graphs to point at showing lots more people using it year on year. Everything’s rosy. If you are buyside and it’s not in your plans, now, then you’re clearly going to be at competetive disadvantage.

While I still think FIX is the eventual tech answer, I also think sellside have always taken all of the talking heads and blurb propoganda with a pinch of salt. And I’ll pose here the question now whether buyside do the same. (This question hasnt come from nowhere – rather crystalised by a conversation earlier today).

Sellside have invested in supporting FIX for (whatever product, type, class, ??) to satisfy  the marketing benefit or on occasion the flow with particular customer(s).  Over and above that sellside have invested in supporting FIX for the products that it is in use for (generally) exchange traded products, and in that space generally equity. Are they building a long term foundation in sticking this in for other product classes or venues – yes maybe so.  Are they believing the hype that everyone’s doing it right here right now … well, where’s that pinch of salt?

So on the buyside; start with the question of how many buyside clients are connected to sellside above FIX 4.2 … albeit with some agreed custom extensions that may or may not be 4.3+ or 5.0 compliant?    If the FPL talking heads are bigging-up FIX saying it handles all asset classes and types of flow and whatever, do buyside (quietly from a position of mild embarassment) discount this because they know they have fundamental tech problems to sort out first; problems regarding inhouse pricing and trading infrastructuure before they can even start to think about how this all interfaces with the outside world?  Problems where years of (relative) under-investment (in the big scheme of things) means the spend now needs to go there first; before the outside world connectivity comes into play.

Rather than focussing on what the latest version of FIX (feasibly) brings, wouldn’t FPL get more buyside uptake by delivering speeches and generic roadmaps that help go from a crap infrastructure position now to the wonderful world of full connectivity and everything that moves [via FIX].  If buyside can discount a presentation because they ‘feel’ they are behind the curve in terms of general oms/ems infrastructure, because the message is so just plug it in and alls well, and this stops them actively proceeding on as FIX implementation for their etrading; then that ~ 18 month lag for critical mass to connect via FIX is going to continue to roll at a constant 2 years…. because there is no-one “selling” a true solution – other than the OMS (EMS) guys (such as CRD) who pitch their solution as plug and play, and i dare say hit the problem of integrating with something (that is likely antiquated, fragile, and with a tonne of workarounds to automate the workflow).

One of the biggest problems doing this etrading thing at sellside was always that scaling the front end customers or number of trades they could stick through meant any operational workaround was highlighted – because it didnt scale without more people typing. So shouldnt FPL and the vendors hoping to carve a slice of pie be pitching themselves as sorting out the operational mess that the world is in, rather than claiming connectivity to new markets is their way forward at this point?  If its the case that you get the buyside genuinely on board and the world is your lobster, then why keep banging on about new markets and wonderful new stuff; when surely a ‘we can help you from where you genuinely are now into a better future’ is the way to go?

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

July 29, 2007

Algos and FIX

Filed under: Algos, FIX — holky @ 3:57 pm

Following on from previous post about algos and FIX in Europe, Finextra shows FPL take another step forward in standardising the protocol for algorithmic order types… So far 15 industry participants, including six of the world’s largest broker-dealers, have particpiated in testing of the new language. Each firm has published samples of their algorithmic trading strategies in the new XML format, ensuring that all their current and near-term algorithmic trading strategies can be expressed in the new format.

July 18, 2007

wherefore art though, execution venue?

Filed under: FIX, Mifid, Nuts and Bolts — holky @ 11:46 am

what is the industry consensus on how “execution venue” will be conveyed in mifid-ready FIX orderflow?  there are many users of old FIX versions (seems mostly 4.2) who just want to know which field will contain what and when.

is FPL going to use mifid as a stick to beat the non-upgrading FIX users?  giving all an ‘upgrade to 5.0 to get your mifid extensions and more OR ELSE!!!’   ….. or (rather less dramatically) have i just missed/not found a general consensus yet?

June 27, 2007

Gazelles and Lions, part 2

Filed under: etrading, FIX, Nuts and Bolts — holky @ 7:53 pm

The nomination period for the FPL Global Fixed Income Committee closed in May.  We are pleased to announce that George Macdonald (Macdonald Associates) will be the new Co-Chair of the Global Fixed Income Committee.  

Congratulations to George.   While George is very pro-FIX,  IMO if he can help break the (at least perceived) FIX-ness and techy-ness of the Global Fixed Income Committee, so instead it is seen as a [gazelles and lions] high-level and no-holds-barred open discussion group for fixed income etrading/e-distribution, then leverage each firm’s equity business buy-in and awareness of what FPL do, and do well, in order to get far more buyside involved for this generic fixed income etrading dialogue, with FIX only being wheeled out (and then only by the tech committee) when it’s nuts-and-bolts time, he’ll have made a big difference in the fixed income etrading space.

April 17, 2007

Liquidity Hub, not FIX

Filed under: etrading, FIX — holky @ 7:30 am

What are the implications of Liquidity Hub choosing to create their own proprietary API, rather than using FIX, for dealers to connect in consistent fashion to liquidity regardless of where it’s hosted?

With the Liquidity Hub crosshair on Euro Govys (after swaps initial offering from some LH dealers end Jun, US treasury OCT 07, then mortgages), does this introduce a competing ‘standard’ protocol for the most commonly etraded fixed income markets?

March 2, 2007

Direct buyside involvement in FPL / FIX

Filed under: etrading, FIX — holky @ 7:27 pm


  1. Is that the right combination of member firm types?
  2. Should there be more buyside involved in the committees and contributing directly – helping steer fix to ensure it addresses their real pain points and strategic aims?
  3. Or is the buyside voice sufficiently and accurately heard through the vendors?
  4. Or don’t the buyside actually care?
  5. Or don’t they know that they care, because its not something they are directly involved with?
  6. How many buyside firms – larger in size than the small firms who can qualify to get in for free – aren’t involved because there is a cheque to write – whereas they could commit some time, which would be useful if the answer to qustion 2 was yes
  7. repeat from question 3 on….

November 7, 2006

FIX 5.0

Filed under: 2015, etrading, FIX, OMS / EMS, STP — holky @ 5:04 pm

With the release of FIX 5.0 I thought id reflect upon the part of my presentation at Tradetech Fixed Income 2004 where I asked whether FIX will become the defacto standard protocol throughout fixed income, while showing this picture  (when hell freezes over)


Back at that Tradetech I was waving the flag about a new service we’d launched that utilised FIX for fixed income, which made a significant process improvement to allocations on electronic trade flow.  We’d plumbed the Bloomberg allocation screens (which customers use to send allocation instructions for their AutoEx trades) into our allocation engine via a FIX pipe, so the customer could actually interface direct with our engine rather than just msging a sales contact who’d then need to do something to manually book the shape and confirm when done.  Two years on our service is still there, still used, but despite Bloomberg offering same functionality to all other dealers at no extra cost, I am told we are still the only dealer who is actually using this FIX connection rather than relying on their salesguys or middle office getting a msg and manually booking the allocations. This leads me to question whether FIX is as ubiquitous outside of OMGEO etc as is made out for fixed income allocations?

Since that 2004 Tradetech we have established FIX connections in which our customers conduct their fixed income price discovery and electronic order flow. Yes, customers trading Fixed Income with us via FIX. Many sellside have said for some time “were ready for fixed income FIX as soon as customers want to use it”, but I’m referring here to real customers, real fixed income FIX connections, with real fixed income flow via FIX each and every day.  But its generally just those customers using FIX to trade other products with us already and who have the organisational structure allowing them to leverage this existing connection – as the majority of FI customers remain more than happy to continue in the usual multidealer platforms at this point.  If you read my blog then you already know I expect FIX to become the de-facto standard for connectivity on the customer side in the cross-asset space, but as this is driven by uptake of OMS, and specifically for etrading within the OMS, this is still some way off in terms of reach critical mass.  

As the FPL “process” to agree requirements and establish releases means FIX is only ever deployed in OTC space to replace whatever the original connectivity solution was, would moving to an open source development model mean product initiators could “do it in FIX ” from the outset rather than building their proprietary connectivity which will at some point in the fullness of time be supported in FIX?   Surely once the guys at the coal face of developing electronic trading for totally new capital markets initiatives have the ability to deploy a full lifecycle FIX-based solution from day1, FIX would really work its way into the hearts and minds of the movers and shakers who sponsor these development projects? …at which point uptake would surely snowball.

The OTC FX and FI electronic markets .. and so the current generation of pricing/trading systems .. were built upon the premise of using proprietary APIs, and these APIs have each evolved in-line as each liquidity pool has evolved over the years.  So for existing market participants FIX will clearly need to do that connectivity better in order to be considered a candidate to replace any of this existing connectivity.  Of course one “better” might be in the aggregation of disparate feeds and venues; e.g. the pitch of Currenex’s “OpenSTP/FX” (FIX-based STP protocol for FX, MM and precious metals), though this clearly only works as a standard if more than one of the liquidity pools offers it  :-s  (and even then this particular Currenex example is only really of interest to those who don’t have an existing STP capture in place).

It’s not all doom and gloom. FPL has addressed some of its major issues in FIX though; with FAST aiming to shut up everyone who says FIX can’t cope with streaming data, and 5.0’s transport independence addressing the complaint that there are too many versions of FIX in use for it to really be a “standard” (- though is the irony that we still need everyone to update to 5.0 in order to actually use this??), the hurdle to using FIX appears now to be just a matter of “implementation”  – shifting the problem from being a technical issue into a “FIX implementation” resourcing issue instead.

It’s the new venues and market participants (and for examples of these see the “2015” category) that will drive the uptake of FIX in the OTC space.  So in terms of that slide I was talking about at the start of this… while it’s definitely not freezing over in Hell just yet, I think it has probably got colder there in the last couple of years.

August 30, 2006

EMS for fixed income?

Filed under: etrading, FIX, OMS / EMS — holky @ 10:46 am

TowerGroup: Days Numbered for Independent EMS Providers?

Remaining on the same train of thoughts as my blog about OMS driving FIX uptake on buyside in fixed income space… where is a standalone Execution Management System providing a customer interface into the fixed income electronic markets (tradeweb, marketaxess, bondvision, and so on). Here I’m not talking about a full-rambo Order Management System, with full-rambo OMS functionality and price, but just the straightforward aggregation of etrading connectivity so customer runs EMS rather than each platforms separate application/workstation. This of course has same potential impact on FIX fixed income uptake on buyside, only sooner as theres clearly no reason to implement EMS if youre not also “doing” the connectivity piece.

From technology perspective surely the EMS view is just about the aggregation of these markets into a single market-depth screen etc, with single (look-and-feel) order entry functionality, and a single feed into booking systems etc – something ION marketview (at least) has been doing on sellside for years. And with each of the platforms offering a FIX interface on customer side, this is actually then just aggregation of a handful of FIX connections – something existing EMS guys are clearly able to do. So is fixed income aggregation something the existing EMS guys have appraised and discarded- even though it could get their app onto customer desktop (even if only in “lite” form for FI)?  It will be a shame if the concept of a dealer-independent EMS dies off just because of the tough sell to customers because of the commitment to use that providers algos in other product areas.

August 22, 2006

FIX for fixed income order flow ; buyside

Filed under: etrading, FIX, OMS / EMS — holky @ 3:17 pm

FIX will become the de-facto protocol for fixed income order routing from a buyside perspective. But it is going to take a while so don’t hold your breath…..This year we’re seeing many more buyside firms implementing fixed income order management systems (OMS). But even with their own desktop (the OMS) from which they conduct proprietary value-add alpha-seeking decision making, it is still incredibly rare for customers to acknowledge a desire to imminently aggregate their participation in the electronic fixed income markets into this desktop. OMS are being put in place primarily for compliance benefits.With typical maximum integration between buyside systems and the etrading platforms currently to upload/download orders and trades via a spreadsheet, the platforms’ existing buyside FIX connectivity offering is clearly very little used at this point. But the FIX connection is there as and when the appetite to connect from OMS arrives. And in terms of bang-for-buck, customers clearly will connect to these platforms first – a conceptually simple change to existing workflow so you can “press a button to release the orders” to market rather than upload/download via spreadsheet.After that, with dealers offering that customer direct connectivity by way of a service enhancement/cost reduction exercise, we see a landscape similar to the equity world now – where individual customers connect to a few chosen dealers direct, and via market intermediaries (i.e. the platforms, above) to reach other pools of liquidity. This builds on the pipes and connections already in place from the OMS. These use FIX.

So with the players coming onto the pitch in the form of the OMS being deployed in buyside, and the OMS vendors often being FPL members .. and the platforms already “offering” a FIX interface for buyside to connect for their order flow, it is surely an open goal for FIX to become the de-facto standard in this space .. in which case it’s just a matter of time…..

August 8, 2006

LatentZero Partners With MarketAxess to Offer Improved STP

Filed under: etrading, FIX, STP — holky @ 7:01 am

Latest pr showing that even though MarketAxess had FIX offering back in Nov 04, ‘better’ STP is still newsworthy. So just need customers to really make use of this then :-s

“LatentZero has formed an alliance with MarketAxess, the leading electronic, multi-dealer to client platform for U.S. and European credit fixed income and emerging markets securities. The collaboration will see improved STP and enhanced electronic trading connectivity for users of LatentZero’s order management and trading solution, Capstone Minerva™.”

August 4, 2006

STP and Zero Touch Trade Flow

Filed under: etrading, FIX, STP — holky @ 3:12 pm

While the majority of trades from institutional customers are allocated/split, and the workflows offer a degree of STP, true zero touch trade workflow is still the exception rather than the norm.

Customers measuring their STP rates based on how much intervention was required to get the allocation instructions out the door really are missing the point.  Even if their machine can spit out a fax or telex or email automatically with their allocation instructions and they can count this as 100% STP’d, sellside still have to employ someone to receive and deal with the instruction – as well as placing a manual step in the process which slows everything down, this also increases transaction cost because these human stages do go wrong. Having people in the workflow increases transaction cost for both sellside and buyside, as “people time” is used both sides to deal with trade exceptions that result from the initial human error. So zero touch trade flow needs zero human touch – which means machine-to-machine instructions.

While there should be real interest from both sides in reaching true zero touch trade flow, the paper and people based scenarios above are still definitely the norm. This is not because the technology does not exist. The major fixed income venues (tradeweb, bloomberg, marketaxess, bondvision, and even reuters now) offer their own electronic routes for post trade allocations etc, which are plumbed direct into the dealers trading systems (on the assumption all dealers have chosen to hook them up). But these are not widely used – customers prefer a generic solution that spits out paper or an email.

So is FIX for fixed income the answer in the post-execution space? Not yet, as major accounts have omgeo or their own fax/telex thing setup so they need ‘a reason’ to change. Buyside firms merging then rationalizing their operational effort may trigger this, but if the message to buyside is that alls well and good in (say) euro govvies and lets apply the same to next product set, then surely we’re papering over the cracks, and we need to get the post trade stuff sorted out in order to really progress. So how do we do that?

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