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?

April 7, 2010

eTrading from your iPhone

Filed under: etrading, Nuts and Bolts — holky @ 7:11 am

JP Morgan launch Morgan Direct for iPhone and claim first past the post with an institutional FX trading offering in a native iPhone app. (You can tell it’s institutional, because if you try to register as a private investor it tells you that its only available for institutional clients). Obviously the scope of the app is heavily constrained in terms of compliance and (institutional) client-side controls over what functions can be performed away from the reasonably controlled office environment; but from FX perspective seeing current rates and being able to cancel current orders looks like it is there, as well as the ability to raise new orders. I’d be interested in the uptake of this; is this genuinely a client tool or more of a marketing exercise? ..I guess the answer depends on what type of institutional client we’re talking about..

Looking forward to seeing if the first institutional ipad etrading app will be far more functionally rich. Watching the ipad etrade movie im wondering whether “fat finger” will ultimately be a setting to resize the trading buttons?

Are any of the OMS offering a native iPhone view? Perhaps a big brother compliance/risk view of whats going on to keep an eye on everything while out of the office? Probably an easier adoption route than trading to start…

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.

February 10, 2010

We’re still not working from home…

Filed under: etrading, Nuts and Bolts — holky @ 9:48 pm

Ah another year on from last snow related post, and its much the same… Tweet from Kevin at Tabb says NY Equity vols are down 15% this morning because of the snow – but it seems regulated functions are still not trusted to work outside of the office? …. also appears that even the less regulated high freq guys managing systems that are turning over big volumes dont have remote control units..

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?

February 17, 2009

What lies ahead for e-trading?

Filed under: etrading, Nuts and Bolts, STP — holky @ 7:48 pm

Well, I liked the sentiment of the headline from Icubic “talking their book” (and indeed mine too) via “Electronic Trading: Visibility and Agility in a Fragmented Market”, stating-

With liquidity continuing to decrease, as the financial crisis unfolds further in 2009, it is widely accepted that electronic trading will play a pivotal role in ensuring banks can stay abreast of market developments, capitalise on fleeting opportunities and ultimately retain an advantage in a highly competitive landscape.

…but the Aite group report“The Next Challenge in FX – Creating a New Post-Trade Paradigm in an Electronic Reality” struck a particular chord with me. Yes, this is partly because I’ve been blinkers-on in the end-to-end FX space for the past couple of months and realise how painfully manual everything still is, but it’s also because I’ve always felt the spotlight was always on the execution-related bells-and-whistles arms race, at the expense of the far more more mundane requirements of actually sorting out the operational side of the dramatically increasing levels of trading being done [because the front ends got so much better to use].

We’ve all done plenty to exploit those “fleeting” singledealer opportunities, but perhaps our opportunity now really is to build real STP; the collective, cooperative processing that will move us from the (all Aite quoted) FX ticket price for non-top-100-banks of $10-25, to something that compares far better to per-ticket costs of fixed income $12, futures $1.25, equity options $0.75, and equity $0.05 (… though a question on these; are you really only paying 5c per trade for equity processing? ..processing not including clearing?).

Electronic trading in FX has become the norm, and the emergence of high-frequency trading shops and the burgeoning retail market have driven trading volumes into uncharted territories. However, beyond the front office, where most of the innovations have taken place over the last decade, cracks are appearing that might derail the growth of the FX market in the long run. Growing trading volume has had a negative impact on the back-office, post-trade infrastructure of most active FX firms. Today, FX has one of the highest processing cost structures when compared to other popular financial instruments. Industry-wide efforts aimed at easing the post-trade challenge have been met with limited success due to the lack of both coordination and an overarching strategy.

Sure, old habits will die hard – banks still obviously seeking competitive edge will continue to focus on helping their customers trade with them rather than their competitors, full stop. But perhaps the bigger picture is to build those collaborative foundations that will help enable more of your customers to trade more, and do so more frequently, in turn gaining even more value from those wonderful tools you’re offering? .. So shouldn’t we all collectively create the wave first, then we can have the competitive surfing competition once buyside and sellside are at the beach and ready to enjoy it?

February 3, 2009

Reuters/Bloomberg IM

Filed under: etrading, Nuts and Bolts — holky @ 8:46 am

Finextra tells us that Reuters have launched cross platform Instant Messaging, linking their RM community with/into the big wide world. (I should have said finally in that sentence – we were talking to them in some detail about this sort of thing over 3 years ago).

Reuters Messaging (RM) Interchange is being billed as a global instant messaging hub, connecting Thomson Reuters RM with Cisco’s Jabber XCP, IBM Lotus’ Sametime and Microsoft’s LCS/OCS. Users connected to the hub will be listed on an inter-company community directory.

Does an inter-company community directory that (somewhat) validates each user @ their particular firm is who they claim now present a credible challenge Bloomberg messaging? … and given the more open nature of this offering, should we expect quicker development of conversational e-trading functionality?

February 2, 2009

Working from home?

Filed under: Nuts and Bolts — holky @ 3:58 pm

Given the logistics problems the snow is bringing I thought I’d pose a question; how many of your traders are a) allowed to, and b) able to , work from home? Previously there have always been problems with the regulated roles doing their regulated work out of the [watchful eye of the] office, but I wondered if any firms were activly removing these hurdles in particular clever ways in order to support this. And does that give them an advantage on days like these?

November 25, 2008

Behavioural/Operational Data

Filed under: etrading, Nuts and Bolts, STP — holky @ 6:11 am

As quoted here

UK credit card issuers have agreed a framework for sharing ‘behavioural data’ on their customers’ accounts as part of an initiative to meet political demands for responsible lending practices.

Is anyone yet extending this sort of analysis onto operational flows – to record and use the institutional behavioural data (STP rates, blame attributed fails, etc) in establishing a true(r) transactional cost of trading with the client in question for the product in question? …. then using that contextual info as one of the inputs to their pricing engine / SOR ?

November 10, 2008

Get Those Humans Back!

Filed under: 2015, etrading, Nuts and Bolts — holky @ 6:28 pm

EFN tells us that humans are back in vogue…

Wild swings in global stock markets and unprecedented volatility are luring buyside and sellside traders back to the personal touch broking model, where they can find an experienced broker on the end of the phone. Electronic trading remains a high priority, but the human element may be the key to brokers gaining business.

Do you think this is indicative that e-trading technology still isn’t “good enough” to merit the trust of the customers wishing to trade? In which case what function is missing? Based on that article, it’s some sort of reassurance screen/popup; “yes that looks like a very sound trade, pretty much in-keeping with what were seeing, so please click OK to invest wisely”. Ok, that’s an exaggerated thought, but surely a colour/context check could be part of an automated negotiation/orderflow?

October 16, 2008

Clearing is the new black – but nobody cares

Filed under: Client Onboarding, etrading, Nuts and Bolts, STP — holky @ 6:39 pm

Finextra reports the latest exchange looking at the OTC markets – lch.clearnet eyeing up the FX market to work out how they can get clearing involvement.

This is just days after the news confirming fxmarketspace is being closed down (by CME and Reuters) because there was not enough activity on the platform.

Given everyone’s fear of counterparty risk at this point, you’d think the timing cannot get much better for offering centralised clearing for OTC products. So why is it so difficult to onboard clients to these offerings? I can’t believe its just a documentation hurdle – sure the lawyers are probably quite busy with one thing or another at this point, but surely any business/risk manager looking to be a hero would have legal review and signing way up their todo list.

So what’s missing from the pitch?

June 20, 2008

Human sales/trading in an increasingly electronic world

Filed under: 2015, etrading, Nuts and Bolts — holky @ 8:19 am

EFN tells us that TABB reckon e-trading use will grow rapidly in European fund managers and investment banks over the next two years – causing the number of sales traders to drop by 9% a year for the next two years, with human traders executing 50% of flow in 2010 (down from 82% in 2005).

The point that new opportunities for the sellside trader are arising thanks to increasing fragmentation – in providing clarity to the buyside on where to execute (“navigating the markets”) – appears underlined by Traders Magazine suggesting that buyside traders do not have a coherent and considered strategy regarding the use of dark pools (for example 18% of the buyside traders unsure what they think their potential usage would be of a dark pool that was able to send out indications based on order flow that resides in that pool).

Isnt the uncertainty just because the landscape is not particularly well charted because it is still changing (and perhaps dramatically so) – eg more execution venue launches later this year. So while sellside need to help buyside clients understand whats out there, surely once the dust settles and the landscape is charted, more buyside will want to execute based on the proprietary rules that they have, in their systems/processes, with regard to when where and why.

June 17, 2008

French Govvies on MTS

Filed under: etrading, Nuts and Bolts — holky @ 10:26 am

I see French govvy traders’ electronic market making obligations can now be fulfilled away from MTS – here – joining Holland and Belgium in doing this, we must be approaching the tipping point for the rest of the Eurozone Debt Management Offices to similarly open up obligations in terms of venue?? … and this is all happeing at the time the covered bonds guys are seeking their own platform?

Previous post with ICAPs article about the Eurozone restrictions is here

June 11, 2008

Tradeweb RFS

Filed under: etrading, Nuts and Bolts — holky @ 6:27 pm

I see Tradeweb is in the news – with 4 new dealers (Citi, Deutsche, Goldmans, UBS) on Euro IRS, and also introducing a Request for Stream (RFS) trading model for Euro and Sterling IRS.

April 21, 2008

Time for CCP in FI Markets?

Filed under: 2015, etrading, Nuts and Bolts — holky @ 12:21 pm

At the same time the exchange markets are moving into a much more OTC shaped model with fragmentation and dark liquidity .. Tabb is suggesting that the Fixed Income industry may need to migrate from a traditional OTC market without a central venue to a more traditional exchange model in which there are not only liquidity providers making two-sided markets but a vibrant agency model as well.   Full article here

With development resource more scarce given current market conditions I think all roads lead to Rome – with Rome being whatever the target client wants it to be. This definitely isnt a one-size-fits-all sort of Rome though. Instead we’ll see continued fragmentation of the existing etrading landscape leading to multiple venues happily co-existing, but each operating with a model specifically aiming at the type of customer they are targeting.  As each trading model brings a different proposition value for each different tiers on client and also on dealer side, it will be interesting to see how many of the existing venues have appetite for revolution to extend their footprint into dramatically new and unproven models (and new target clients), rather than reinforcing what they do by continuing on an enhancement-based evolutionary path – allowing new venues to enter the picture.

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 19, 2008

The MarketAxess CDS long-game

Filed under: etrading, Nuts and Bolts — holky @ 10:55 am

OTC derivatives spending to soar …says TABB, via Finextra, in which case is the MarketAxess long game actually a good bet?

Quote  Investment banks may be firmly focused on the reform of equity trading in Europe and the US but the fixed-income market is facing different issues, according to a bond trading specialist who argues the credit crisis six months ago may have set back the modernisation of credit default swap trading by a year or more.    

Are any eyes on e- CDS at this point or is everyone looking at rates?  … I wonder just how long that long game is

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 6, 2008

What Do You Want From A Hub?

Filed under: etrading, Nuts and Bolts — holky @ 10:45 am

Another post from John Greenan …. anyone want to volunteer something that fits the bill?

What do you want from a hub? Let’s clarify what we mean here.  In a classic equities buy-side connectivity world the institutional asset manager would generally choose between point-to-point connections using BTRadianz/TNS/similar or a hub such as Thomson Order Routing, Reuters Order Routing, FidessaExpress, UL Net, NYFIX etc.In the past the measure of value of a hub was seen in pure techie network terms – that the value increases as the square of the number of nodes.  That worked fine in a world where buy-sides were busy trying to add as many brokers as possible in the initial stages of the move to FIX based rather than telephone based trading.  But what are the dynamics in motion now?

Unbundling means that you do not need to deal with a broker in order to pay for their research.  So why bother with multiple brokers?  If you look at the execution capabilities of a firm such as Goldman Sachs or Morgan Stanley then it’s hard to see what else you need.  For simple risk management reasons it makes no sense to put all your eggs in one basket but the optimal number of brokers is perhaps now a great deal smaller than the consensus opinion.

Let’s put forward a new model of broker relationships – core and satellite.  Have a small number of core brokers with whom the buy-side maintains deep and broad trading relationships, multi-asset class, algos, programs and so on.  Have a number of satellite brokers that provide specialist execution capability – illiquid German mid caps, access to smaller markets where the tier one firms may not have a seat.  In this core satellite world how many brokers do you need for a global institutional asset manager?  Deal out of the US, EU and Asia Pacific.  Have say 6 core brokers and say 8 satellite brokers per region.  A total of thirty connections.

In this case it’s never mind the width, feel the quality.  Rather than a massive number of connections, lets go for the smallest number but have in depth trading relationships.  What can the hubs offer in this quality, rather than quantity, driven world?

What about a hub that offers 24×5 uptime based upon the hub having two connections to a broker and the buy-side having one connection to the hub?

What about a hub that offers crossing capabilities by default based upon being able to see all flow routed down the pipe?

Another issue, end of days.  In a global trading environment it’s hard to fit in end-of-days for sequence number resets.  Either you have a five minutes slot where a broker is unavailable or else you build two or more connections such that there are regional connections so an end-of-day can run after the business day has finished.

Intelligent management capabilities.  Monitor DKs and rejections and try and add value – notify people and let an investigation begin.

Management statistics.  What percentages of orders go where, which algos are used.  Can any patterns be determined?

Real time and post trade TCA.  How well is the firm performing in executing client orders?

I don’t think that a single hub exists at the moment with all these capabilities but it’d be nice to see it soon…

February 19, 2008

LinkedIn, Bloomberg, and your data

Filed under: Nuts and Bolts — holky @ 9:09 am

Data data data data data.

LinkedIn announcement are going to provide a new relationship mining tool through their network, therefore selling your relationship info as stored LinkedIn … the company is apparently going to be tapping into the “social graph” of its users, analyzing relationships between people, their companies and professions to figure out who knows a lot about what.

Is Bloomberg heading in the same direction?  I see they are now recording the number of hits each persons profile has… an indication of how ‘popular’ or ‘newsworthy’ someone is. Would that and the relationships as defined in that persons address book be worth $$$$$ to journo’s or headhunters?

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.

February 10, 2008

Banking crisis averted? Virtually.

Filed under: Nuts and Bolts — holky @ 8:18 pm

With this news that it is now prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter as per my original musing about Second Life, it seems that virtual regulation is absolutely on the cards… albeit not per-transaction rules at this point, although I wonder how long it will be until a regulator of the real-markets gets involved?

February 9, 2008

Bloomberg fixed income etrading

Filed under: etrading, Nuts and Bolts — holky @ 5:38 pm

So, what is the impact to the future of Bloomberg fixed income etrading now Russel Levi has moved to Superderivatives ?

Older Posts »

Blog at