200 At Bank Of Nova Scotia, Scotia McLeod Will Use TIB

Bank of Nova Scotia (BNS) and Scotia McLeod Inc. have selected Teknekron Software Systems Inc.'s digital data distribution system to support a total of 200 traders at a new Toronto-based fixed-income trading facility, scheduled to go live by the summer of 1994. BNS and Scotia based their choice of Teknekron primarily on the prior performance of the vendor at their respective New York and London trading offices. Reuters' Triarch 2000 was the runner-up in the installation race.

The selection of Teknekron comes in advance of BNS' merger of the bank's Toronto-based fixed-income trading room with the bond trading operation of its Scotia brokerage subsidiary. Robert Brooks, executive vice president of international banking at BNS, says the merger will give traders affiliated with both operations a competitive edge in the global marketplace.

"We will be able to provide our clients with a broader range of services and products," Brooks says. "And we believe we will improve our market knowledge and enhance our trading skills by the sharing of a broader range of financial market information."

At the new facility, the Teknekron Information Bus digital data distribution platform -- known as the TIB -- will support traders of bonds, money markets, foreign exchange and fixed-income derivatives. The system will replace the Reuters/Rich Inc. video switch which BNS uses in its current Toronto-based trading room; Scotia currently uses a range of standalone market data services to support its Toronto bond traders.

However, the TIB will not be the only source of information available to traders at the new Toronto facility. Renaissance Software Inc.'s Opus, a risk- management system that provides BNS with market-specific information for fixed-income derivatives, is already installed in BNS' Toronto office and will be integrated into the TIB after the new trading room goes live.

At the same time, Decision Software Inc.'s DSTS -- an object-oriented trading system for bond traders and salespeople already in use at several Scotia trading locations -- will be re-installed in the new trading room in time for its opening.

During a nine-month stretch this year, from March to October, DSTS went live for BNS and Scotia in five cities, including Toronto, London and New York. DSTS -- which runs in a distributed UNIX environment -- currently supports over 100 Scotia bond traders and salespeople. DSTS uses Ethernet's TCP/IP as its LAN communications protocol with an FDDI transmission standard; it runs on Sun Microsystems Inc.'s IPX workstations using Pyramid Technology Corp.'s ES servers. While Scotia officials decline to comment on the exact date that DSTS would be integrated with the TIB, they did say that the firm would continue to run the system on the Sun IPXs.

Meanwhile, BNS' Brooks says that a decision is still pending as to the hardware platform Teknekron will run on at the new trading site. Brooks declines to say which hardware vendors BNS and Scotia are evaluating, but one source says that they have narrowed their choices to two: Sun and Hewlett-Packard Co. The source says that BNS and Scotia are also considering X terminals, in particular Network Computing Devices Inc.

BNS and Scotia officials say that Teknekron's incumbency gave it a leg-up on the competition. Teknekron has been installed in the New York trading offices of BNS and Scotia since 1989 and in the their London trading facilities since 1991, supporting a total of 200 traders.

According to Cedric Packham, vice president and director of information services at Scotia, the past performance of Teknekron weighed heavily in the decision-making process. He adds that price and functionality were also major considerations.

Packham says that Scotia piloted Teknekron in its existing Toronto-based trading room from the beginning of October through November. He says that the system tested well in key functional areas, such as "...analytics at the workstation, feed-handlers that were available relative to the market data services, and the ability to use it as an integration platform for the trading floor."

Brooks says that while Teknekron's TIB will be increasingly integrated with in-house applications and third-party vendor products such as Opus, it will primarily be used to "...distribute market information and certain internal information throughout the entire trading system." Brooks says that beyond price comparisons, no other vendors were "formally" evaluated.

While the process of evaluating Teknekron's system was relatively short and painless, the same cannot be said for Decision's DSTS system. Gerald Belpaire, president and co- founder of Decision Software, says Scotia performed extensive evaluations of "dozens" of systems, including some 45 demonstrations of DSTS, before the firm made its choice. Though Scotia's Packham says that the actual number of demos performed on DSTS was considerably less, he agrees that the firm evaluated DSTS thoroughly, from both a technical and a user perspective.

Packham says a number of Scotia's senior traders made trips down to Decision's New York-based headquarters to test and analyze DSTS. Says Packham: DSTS "provided a very user- friendly front-end from a trading and sales perspective. And their system had the capability to provide on-line, real- time position management and risk management."

Though Packham was impressed with DSTS' functionality, he says that Scotia's final decision to select Decision's system was influenced most by its use of object-oriented technology via a client/server application. "It was one of the few trading systems that we saw that was in the new world of client/server computing," he says. "...it fitted into our overall architecture in terms of moving to an open systems client/server environment."

One area in which DSTS did not meet Scotia's requirements was capacity: Packham says Scotia had to work in partnership with DSI to "extensively modify" the system, which had previously not been able to support more than seven traders. "We have moved it from being essentially a one-desk system to a multi-desk global trading system," Packham says.

Packham says that Scotia was sold on DSTS' front-office trading room capabilities after its bond traders tested the system in a mock-trading room set up in Toronto in the fall of 1992. Prior to the installation of DSTS, which first went live in Toronto this March, Scotia's bond traders had to derive market information from the firm's ADP-supported back office.

BNS purchased 100 percent of Scotia McLeod, Canada's third largest retail brokerage firm, in 1988. BNS and Scotia's New York and London trading rooms have not yet been consolidated, but Brooks says BNS will merge them sometime after the new Toronto trading floor goes live.