2015 Year in Review: Users Eye Pricing, Analytics—Old and New

In a sign of the increasing complexity of trading and data, Bank of America Merrill Lynch rolled out complex order book data provider EESAT’s OptEx desktop to its buy-side option trader clients, providing them with consolidated data on spreads trades from options exchanges, whereas this complex order book had previously been out of reach for many of the bank’s clients (IMD, June 24). OptEx provides a normalized feed of every order on US options exchanges, allowing users to filter by strategy, stock or sector, according to their trading style.

Some firms battled complexity by deploying sophisticated tick management tools. For example, Indian firm Edelweiss Financial Services rolled out tick database and complex event processing platform vendor OneMarketData’s OneTick platform to conduct quantitative research and perform ticker symbol management across all Indian markets, while Danske Bank also rolled out OneTick to capture and store client trade data, to allow its quantitative analysts to analyze the bank’s execution quality (IMD, July 14; Nov. 5).

Others sought out vendors offering the most accurate and timely data—especially for fixed income pricing, valuation and index creation. For example, MUFG Fund Services, the fund administration arm of Mitsubishi UFJ Financial Group’s Investor Services division, signed up for Markit’s fixed income pricing service to support its calculation of net asset values for more than 1,100 alternative funds (IMD, Oct. 1). Also tackling the complexity of bond markets was Northern Trust, which in June selected Interactive Data’s Continuous Evaluated Pricing bond data to support its Credit-Scored US Corporate Bond Index so it could calculate and disseminate index values intraday, having already implemented the CEP feed as the source for three other fixed income exchange-traded fund iNAVs, replacing end-of-day data from IDC (IMD, June 3). Meanwhile, Japanese broker Kabu.com Securities began sourcing securities finance data from New York based DataLend, the data arm of securities finance platform EquiLend, as economic policy reforms in Japan, such as an ease on short-selling restrictions, have created opportunities for securities finance (IMD, May 20). 

In some cases, rollouts were more complicated, with more parties and more moving parts, such as Toronto-based proprietary trading firm WD Latimer’s deployment of a pricing and market-making solution combining data from Activ Financial and a spreadsheet front-end from UK-based MDX Technology, integrated by Collaborative Financial Services Inc., which provides business development for both vendors in Canada (IMD, Aug. 12). Officials say the firm needed a more automated solution to meet the minimum market-making requirements of startup Canadian equities exchange Aequitas Neo.

Some firms, though, saw the opportunity to take the plunge into completely new areas. Institutional and retail electronic broker Interactive Brokers partnered with online content portal Airex to augment its own Investors’ Marketplace content portal of third-party content and services (IMD, Oct. 7). In addition to significantly expanding the range of content it can offer clients, the deal also reduces the vendor management burden for Interactive Brokers, by having Airex perform that role with its content partners.

Meanwhile, New York-based agency broker WallachBeth Capital is building “deep learning” techniques into its algorithms and trading platforms to allow clients to leverage predictive pricing and other analytics based on unstructured data to generate alpha, optimize portfolios and manage risk (IMD, Nov. 20).

While WallachBeth’s tools are a nod towards futuristic artificial intelligence, they’re also—like so many of this year’s efforts—simply a new way of creating new types of pricing to give firms an edge.