NEWS RETRIEVAL

DEPARTMENTS

SS&C Finds An Oasys

SS&C Technologies and Thomson ESG have agreed to integrate SS&C's Antares 2000 and Camra 2000 asset management products and Thomson's Oasys and Oasys Global trade management services. Asset managers will be able to link their trade allocations or "splits" electronically in the Thomson ESG services for automatic trade confirmation and settlement processing. The result will be a straight through trade management and processing environment, as well as a reduction in the distance between portfolio trading and management, which continues to close toward real time.

Primex Auction System Is No ECN

"ECNs accept limit orders and post them as quotes. Primex takes market orders and exposes them to an electronic crowd to attempt to get better prices," says Glen Shipway, CEO of Primex Trading NA. And that's why the Primex Auction System, a new electronic auction market system for securities trading, is not an ECN. The system, which has financial backing from Madoff Securities, Goldman Sachs and Merrill Lynch, is slated to go live early in the second quarter of 2000. "It will be situated within the confines of a primary or regional exchange," Shipway says. Stocks in the system would be traded in decimal increments by both institutional and individual investors through their brokers, who could buy and sell either through the Internet or their terminals. Orders could also be routed to New York Stock Exchange specialists, Nasdaq market makers and private trading networks such as Instinet. Primex is now in conversations with both primary and regional exchanges. "Whatever SRO or marketplace [we decide on] must be able to accommodate a vision of exposing [our trades] to the widest audience," he says. While Primex has filed a patent on the software and concept behind the system, the underlying technology won't be chosen until that decision is made.

Lehman Equity Front End: The Revamp Continues

Lehman Brothers just keeps tinkering with its equities trading desk. So far it's retooled its program trading system, global portfolio routing system and listed sales and trading front end. Now Robert Laible, senior vice president and head of Lehman's agency portfolio trading group, is looking into client connectivity and quantitative research. Lehman's recently signed an agreement to use Plexus Group's Broker Edge Monitor to provide execution data and broker quality rankings to its clients, its pre- and post-trade analysis for money managers and plan sponsors and its analysis service to monitor the effectiveness of Lehman's own trading. Lehman's got some other pots on the stove, too. "We're a month away from installing Brass as our Nasdaq front end," Liable told Waters in July. But "we're focused right now on Web applications, order flow issues and ease of use type issues."

FIXing For A Certification Vendor

By the time you read this, the FIX Certification working group and consultants from PricewaterhouseCoopers should be poring over responses to the FIX Certification RFP. Responses to the 50-page RFP were due August 9, with a final decision expected around August 20. The effort to tap a vendor to set a standard for the proper use of FIX is at the very top of the US and European FIX Committees' list. Why? To ensure compatibility as FIX usage expands globally. The winning vendor (or vendors) will work under the direction of FIX Protocol Ltd. but will be responsible for providing the testing and certification process globally and during global trading hours. The vendor must also service both vendors and principals; build a testing facility in as automated a fashion as possible, one that will likely require no human interaction by the firm doing the testing and certification; provide the service via the Internet; and deliver a certification process that ensures compatibility at the FIX session-level and for FIX business-level messaging. The FIX Technical Committee will maintain the FIX spec, establish the certification steps or scripts, including the expected results, and maintain the official list of who has been certified.

The Dawn Of The SuperECN

Investment Technology Group and Bloomberg have teamed up to create a "SuperECN." The new service, which provides access to both a continuous market and a crossing market, will be open to other investing partners. And while new partners will have to put up capital, the greater emphasis will be on order flow contribution, says Kevin Foley, president of Bloomberg Tradebook. That will encourage partners to take a more active role. They'll have a greater stake in what happens, he says. "If you carry it on your back, you own it," he says.

Salomon Smith Barney Goes to Geneva

"With our size, we had to have a solid processing engine," says Sal Campo, a managing director with Salomon Smith Barney's equity prime brokerage unit. That's why the group licensed Advent Software's Geneva system for portfolio accounting for its hedge fund clients. The system is being used to maintain the books and records for funds that use Salomon's prime brokerage unit as their primary execution agent, says Campo. He says there will be 25 users at Salomon. The investment bank considered as many as a dozen systems during its year-long search to replace a mix of at least four proprietary accounting systems. The deciding factor was Geneva's support of Sybase's Adaptive Server database and Sun Microsystems' Solaris operating system, both of which are widely used at Salomon. It also helps that Advent's Axys portfolio management system and Partner system for doling out profit shares among fund partners are widely used in the hedge fund sector. Campo could not offer a date for the installation's completion. "We'll be replacing the existing systems one by one, and we want to make sure that any report a client is getting today, he or she will still be getting once the new system is live," he says.

IPO Fever Hits Vendors

The staggering success of recent issues from Tibco Software and Persistence Software have revved up interest from other financial service vendors, including Bridge, Optimark and Trading Edge, to name just a few. Tibco Software shares more than doubled right out of the gate, and Persistence was trading at more than double its original offering price last we looked. As such, financial system vendors are growing increasingly impatient to strike while the market's hot. Welsh Carson Anderson & Stowe partner Bruce Anderson confirms plans to float Bridge. Bridge is currently assessing two options: spinning off Savvis, the private network services company it acquired earlier this year, or a full scale IPO for all of Bridge. Internet-based trading service vendor Trading Edge is also aiming to go public--officials there say it's likely to happen within the next 18 months. And while Optimark officials decline to comment on the record, sources there say it plans to float, too. Of course, what goes up, does (at some point) come down. One of the highest flying middleware stocks, Neon, took a nosedive in July.

Schwab Takes Reuters Plus

Charles Schwab & Co. signed a multi-year deal to install Reuters' revamped Quotron product--Reuters Plus--for its US equities traders. That puts Reuters Plus at some 6,500 positions in Charles Schwab's 297 offices. The Reuters Plus installation, which was slated to take place in August, replaces Schwab's existing Quotron Advantage AE and Quotron Market Color equities workstations. Schwab is integrating its own proprietary applications within the Reuters Plus container and is utilizing the product's Internet capabilities.

Get Redi, Get Set: Another SuperECN Is Born

"Partnering with them and adding order flow from the other firms, the opportunity for liquidity is just humongous," says a spokesperson for Charles Schwab. Schwab, along with Fidelity Investments, DLJ and Spear, Leeds & Kellogg signed a letter of intent to convert RediBook into a superstrength ECN. The four have equal stakes and expect to contribute order flow. A CEO will be hired to run the new, unnamed ECN, but management details were unavailable at press time. Three of the firms--each of which is represented by its respective trading divisions--started interfacing to RediBook in August. Next up: the actual transformation of the ECN. RediBook is currently considered the third largest ECN.

Tradebook Becomes Global

Bloomberg's Tradebook will become Global Tradebook this quarter under an agreement with Hong Kong-based CLSA Global Emerging Markets. The new service will provide global equity execution, matching, order routing and settlement services in 65 countries. Tradebook offers integration with Bloomberg's portfolio tracking tools, order management and analytics for equity markets worldwide. CLSA, a brokerage and investment banking firm that serves the emerging markets of Asia, Latin America and Europe, will contribute its experience in trading, executing and settling equities overseas. It will also set up a "special purpose vehicle" called G-Trade Services to deal with the business derived from Global Tradebook.

A Prudential Choice: GIM II

Prudential Global Asset Management is spending three years and $25 million to consolidate its portfolio management and accounting systems on Integrated Decision Systems' (IDS) Global Investment Manager II (GIM II), says vice president and CIO Michael Garito. Prudential also considered Thomson Financial's Portia and Financial Models' Pacer. But since Prudential's already using GIM II for its fixed income accounts, IDS won out. "Our strategy is to buy as much as we can, rather than build it," says Garito. "But we also want to buy products that allow us to build functionality into them." Prudential had previously tried to consolidate all its processing on DST Belvedere's Global Portfolio System. Garito says the previous plan had been to have one system that does everything, but that quickly proved ineffective.

EnergyLive Still Alive

Contrary to reports in this magazine (Datascope, July 1999), EnergyLive, the IPE's Internet-delivered, real-time data service, continues to provide quotes to customers around the globe. In addition, the IPE is releasing a new and improved version of EnergyLive this month. The new service will include real-time data as well as news and charting. The service is delivered directly to a user's browser and needs no special software. There are no standing charges; "you simply pay 75 pence to log on and a penny a minute while you remain connected," says an IPE spokesperson. The real-time prices can be accessed via http://www.energylive.com/. Sign up now for a two-week free trial.

Keeping Up With The XMLs

FpML. FinXML. NTM. MDML. FIXML. These acronyms may not mean much to you right now, but we're betting that they'll be rolling off your tongue pretty darn soon. So here's a quick guide to what's rapidly becoming one of the hottest areas in financial technology: XML protocols.

FpML Stands for: Financial products Markup Language. Sponsors: JP Morgan and PricewaterhouseCoopers. Market segment: Internet-based electronic dealing and information sharing of financial derivatives, particularly interest rate and foreign exchange products. Supporter: Infinity, which has joined the FpML technical committee and announced its support for converging FpML and its own NTM (see below).

FinXML Stands for: Financial XML. Sponsor: Integral. Market segment: Capital markets. Supporters: Chase Manhattan and Sun Microsystems. "Just as FIX, Swift and [International Swaps and Derivatives Association] ISDA have contributed to building a standards-based platform, we see XML as the solution for data interoperability between our systems and with our customers," says Brian Slater, Chase Manhattan senior vice president, global technology. Status: FinXML is interoperable with existing financial protocols such as FIX and Swift and will be made compatible with outside industry standards.

NTM Stands for: Network Trade Model. Sponsor: Infinity. Market segment: Risk management. Supporter: Mint Communications Systems, which is endorsing NTM for its own messaging middleware products. Status: When it's published, NTM will consist of risk management and derivatives schemas and interfaces expressed in XML.

MDML Stands for: Market Data Markup Language. Sponsors: Microsoft and Bridge. Market segment: Market data. Status: The current specification, which is in its fourth revision, notes that "most effort has gone into defining vehicle [record] request and response.... The topic of updating data has not yet been addressed." Right now, wider issues related to handling real-time data are not addressed either, including feedhandling, stale data, load balancing, resilience, recovery after failure and other such issues typically addressed by a data distribution platform.

FIXML Stands for: FIX + XML. Sponsor: FIX Committee. Market segment: Buy-side/sell-side connectivity. Status: Still in tests at Morgan Stanley and Fidelity at press time. But FIXML is starting to appear in products (see Institutional Technology, page 40).

But won't all those efforts confuse and fragment the market? No, says Innovision president Bill Cary. "Other efforts to develop other languages are good if they're using the protocol correctly," he says.

So study this guide and heed the words of Cris Conde, head of the trading systems group at Infinity parent Sungard Data Systems: "I simply cannot believe that there will not be a coalescence around XML. This is something that will help us all."

Fleming to Pilot FIXML

Robert Fleming is planning to test FIXML--the Extensible Markup Language version of FIX--as a way to distribute data via browsers and broaden its appeal to investors. "FIXML is actually a progression from FIX," says Andrew Wilson, director of business systems research and a member of the FIXML Working Group. In August, the London-based mutual fund company plans to use a standard FIX session layer but replace the conventional FIX tags with XML tags, Wilson says. The company plans to start with IOIs and then move on to orders and executions. "There is little difficulty incorporating XML into standard FIX," Wilson says. "XML makes it easier to do list orders and list trades."

Liberty Aims to Go Electric But Cantor Sues to Block

Libertydirect, Liberty Brokerage's online trading system for US Treasuries, was slated to go live in August, though not if Cantor Fitzgerald can help it. Cantor filed suit in Delaware US District Court alleging that Libertydirect infringes upon Cantor's US patent for its Interactive Matching service. The Interactive Matching system is used by the Cantor Exchange, as well as Cantor's E.Speed bond transaction system. Cantor officials assert that the Interactive Matching utilized in Cantor's Speed system is "proprietary and unique" and for the "exclusive" use of Cantor's clients. Officials at Liberty decline comment. What they will say is that Libertydirect combines traditional green screen and voice brokering with a new automated, Internet-based matching service for bond trading. It also offers end-to-end trade processing on one screen from discovery straight through to settlement, along with quick checkout, says Abroo Shah, senior vice president of Liberty Brokerage. And US Treasuries may only be the first step. "As the demand for electronic trading in other fixed income and derivative products evolves, we can include them on the Libertydirect platform." says Liberty president Tony Sigillito.

Fixed Income Trading Via Bloomberg

Bloomberg and Intercapital (Icap) (now Garban-Intercapital) have teamed up to launch a new electronic broking system for fixed income, perhaps as early as October. The two join a growing list of vendors and brokers looking to electrify one of the last bastions of voice-brokers. Under the agreement, Bloomberg will provide the technology and network and Icap will deliver interactive quotes on US Treasury bonds and European government bonds. Interest rate swaps and options may be added in the future if a suitable clearing mechanism--perhaps the London Clearing House's Swapclear--is in place.

Consortium to Launch Brokertec

Credit Suisse First Boston, Citigroup/Salomon Smith Barney, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley Dean Witter all agree on one thing: Brokertec Global. The seven are part of a consortium that is planning to launch this electronic bond trading platform by the end of this year. Brokertec Global, which is partly owned by the banks, was founded by Hal Hinkle, formerly Goldman Sachs' head of electronic commerce in fixed income. The service will initially focus on US and European government bonds.

FX Forwards Go Electric

Tullett & Tokyo and Bloomberg are scheduled to launch an electronic trading system for foreign exchange forwards in September. Fast Forwards is owned by Tullett and will be marketed, delivered and supported globally by Bloomberg and accessed on a standard Bloomberg terminal or on Open Bloomberg.

NYSE Issues FIX RFP

The New York Stock Exchange (NYSE) has issued a Request for Proposals (RFP) to find a FIX engine. The exchange plans to install it early next year, says Louis Pastina, vice president, point of sale technology at the exchange. "We need to be able to interact with people doing FIX," he says. The move will also facilitate the plan to create a full audit trail by time stamping every order at point of sale. Meanwhile, Securities Industry Automation Corp. is testing a couple of FIX engines, Pastina says. The exchange is also planning a Common Access Point into CMS and is working with the FIX Committee to put together an RFP to build that middleware. The middleware will incorporate FIX and other protocols as needed.

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