Moore Capital Unit Boots FD, Puts Faith In Homegrown System

Investment Management Services Inc., a unit of Moore Capital Management, has yanked its two-year-old FD Consulting Inc. digital data distribution and workstation software system. The firm will instead provide its investment managers and traders with market data and analytics using a proprietary system it has been incrementally developing and rolling out over the past 18 months. The firm had been FD's first major client on the buy side (Investment Management Technology, Sept. 20, 1991).

Officials at Investment Management decline to comment or could not be reached at press time. But other sources -- both within and outside the firm -- say that the firm believes it gets much more functionality from its homegrown system than it would have gotten from its FD system, even had that system been fully functioning as advertised.

These sources say that the firm has considered developing its data distribution software for sale as an off-the-shelf system. They add, however, that Investment Management will not likely move forward with such plans -- primarily because other firms that have attempted to launch software-sales spin-offs have not gotten very far. These include Susquehanna Investment Group Inc.'s Susquehanna Technologies Inc., Phibro Energy Inc.'s mc2 Technologies Inc. and Swiss Bank Corp./O'Connor's Black Diamond Technologies.

New York-based Investment Management is a closely held money management firm headed by the controversial but top- rated hedger Louis Moore Bacon. Investment industry arbiters have identified Bacon as one of the top three traders in the world; other reports have described him as a ruthless and eccentric dealer who has made few friends on his way to the top. Investment Management previously did business as Moore Capital Management, but changed names following a recent restructuring.

Two years ago, Investment Management's trading room comprised some 20 money managers, but sources say the firm has grown rapidly since then, with some putting its current money manager population at something closer to 100. The firm invests its assets primarily in derivatives and is an active program-trader of these securities.

Sources say that the MIPS data distribution system and Xtrade workstation software installed at Investment Management never satisfied the firm. They say that the FD products had only been installed for a short time when the firm's then-head Jerome Abernathy hired on a couple of technologists from his previous place of employment, Morgan Stanley & Co.

Abernathy, along with his new hires, had been active in Morgan's more or less famous Advanced Proprietary Trading (APT) group (TST, March 4, 1988). APT and its successor group at Morgan -- the APL group (which was named for the programming language its members used -- devoted its energies to building black-box program-trading systems, among other things (TST, Feb. 24, 1992).

Abernathy has since left Investment Management, incurring Bacon's wrath, according to press reports. His technology staffers remain, however.

Among other things, Investment Management uses its homegrown platform to deliver analytics in support of program trading. However, because the firm often program-trades securities that are not listed, the platform does not incorporate interfaces to exchange order-execution systems, but instead provides the firm's money managers with instructions to trade.

Investment Management's decision to boot FD follows the sale last summer of the financially-strapped vendor to Micrognosis Inc. (TST, July 26). But the fact that the firm had been actively cultivating its replacement system well ahead of FD's sell-off suggests that its resignation was not directly linked to FD's change of ownership.

Some sources point out that the newly combined FD and Micrognosis had not been striving to retain Investment Management's business, perhaps because they were aware that they'd already lost it. But clearly in the weeks since the purchase of FD there hadn't been much communication between vendor and firm: When Investment Management issued its letter of dismissal to FD early last week it addressed that letter to an FD customer-support representative who'd quit back in June, sources say.

Sources say that the firm's FD data distribution system was from the outset not capable of handling the high data volumes which it hoped to shuttle around its network of Sun Microsystems Inc. SPARCstations and servers.

Sources say that the firm wanted to distribute four digital data feeds -- including Reuters' Marketfeed 2000 and Selectfeed, Dow Jones Telerate's TDPF and Knight-Ridder Inc.'s DDF. The firm maintains a database comprising 400,000 symbols.

A key early problem with the FD system was the vendor's Marketfeed 2000 linehandler, which -- in the words of one source -- "never worked." Sources say that the technology staffers from Morgan Stanley set about replacing that component of MIPS and proceeded -- component by component -- over the next several months, to replace nearly the entire infrastructure. Among recent developments, sources say, is a TDPF linehandler, which Telerate has certified.

Investment Management also designed its own front end, known as Spike -- a name that the firm represents using a dollar sign in place of the S. Sources say that Spike runs under X Windows and was written mostly in the C programming language. The development also makes use of an internally developed screen-building facility.

Sources say that the data distribution mechanism is based entirely on TCP/IP protocols and point-to-point communications. They say that among the off-the-shelf alternatives to FD which the firm informally evaluated, all were reliable broadcast-based -- something Investment Management's technologists felt was not up to the task of handling its network traffic.