Pictet Asset Management enlists Finsemble to overhaul fixed-income, FX workflows

For Carl James, global head of fixed income at Pictet Asset Management, the pull and promise of desktop application interoperability seemed blindingly obvious. A little over a year ago, he made the first move to bring interop into the fold, as he sought to simplify cumbersome cross-application workflows.

James runs a team of 17 traders across four desks at the buy-side arm of Swiss bank Pictet Group. It was around the end of 2019 that he and David Harvey, head of trading technology at Pictet, who specializes in working with order management systems, with a focus on the Charles River Investment Management Solution (IMS), started to seriously discuss the rise of app interoperability platforms—the main trio being Cosaic (formerly ChartIQ), OpenFin, and Glue42.

“In the push for automation, I wanted to find a way of collapsing trader workflows. Having reviewed other offerings, with David, we landed with Finsemble,” James tells WatersTechnology. “We felt that they were a company that, culturally, was a good fit. They were used to helping companies build the Finsemble ‘narratives’ from the ground up; they understand that there is a ‘try and fail’ element to the process.”

Rapid Progression

Pictet Asset Management has since used Finsemble to automate three workflows: foreign exchange (FX) pricing, money-market yields, and credit-instrument pricing.

The money market workflow, in particular, was perhaps the trickiest of the bunch. It involved much back-and-forth between applications and screens, and copying data from those disparate apps into many fields. However, a fundamental building block the team needed in place before they could trim the workflow’s length was a reliable FX pricing system.

“Particularly in the money market space, where we’re really looking for very, very accurate pricing—your standard optimal Bloomberg pricing doesn’t really cut it,” said Dan Benninger, investment platform integrator at Pictet, during a recent webinar.

From there, the development team set out to build a proprietary FX pricing application for the traders. The tool, dubbed FX Pricer, leverages a back-end FIX gateway with connectivity to several liquidity providers. They built interoperability with the Charles River IMS using FDC3—a set of standards meant to create a common language for sharing context and data between applications—not only to trade bonds, but also to perform FX hedging in cases where the bonds are priced in different currencies. With one click on an order, the trader has a full understanding of the pricing around that FX instrument, along with a graphical view of the spread and mid-price. Through Finsemble’s Bloomberg integration (via the Bloomberg Terminal Connect API) the application can then launch Bloomberg’s historical charts of the currencies to provide additional context to the trader.

That was only the beginning of the development team’s work as the FX Pricer gave way to the Money Market Pricer. The traditional trading workflow involved manual FX pricing via a third-party platform, spreadsheet calculations to gauge yields and cash flows adjusted for different currencies, and returning data to prospective investors.

Enter Finsemble, which acts as the workflow engine that allows Pictet to input data from one application—for example, details of a commercial paper offering that’s sitting in the Charles River OMS—automatically into Bloomberg and other systems.

“It allows them to write a small piece of code in one place, living inside Finsemble, that connects to different systems and automates the multi-step calculation process,” Dan Schleifer, Cosaic CEO, tells WatersTechnology.

The third workflow to be aided by interop thus far is in credit, which constituted the firm’s first major back-end development by creating an AX database. The database, which uses a flow of axe data—essentially, wishlists of securities that other firms are interested in buying or selling, and which are provided through trading counterparts and aggregators like MarketAxess or Tradeweb—serves as an automatic cross-referencing system that can recognize opportunities to sell certain bonds already on Pictet’s books, while identifying opportunities to buy similar instruments with better yields, for example, with one click.

The concept behind the first credit-focused rollout was simple: Could interoperability let Pictet traders pick out any bond on their blotter and instantly see its price, who priced it, and its history, without having to do the heavy lifting? If it could, they could determine the bond’s liquidity right away, and that could guide the traders on how to manage its trading.

A Petri Dish

Culture remains a large part of Pictet’s tech strategy, but it’s important to note, James says, that this doesn’t always mean more technology, but smarter technology, and shifting some old-school mindsets. Much of that is made possible through close collaboration between the business and technology sides.

“I think a lot of what we hear across the industry is there’s a real disconnect between IT and the business, so to speak,” said Schleifer during the webinar. “And I think the business doesn’t believe that they’re going to get responsive innovation, that when they ask for something from the developers, it’s going to take six months and cost a million dollars, and it may or may not come out at the end of that process looking like what they asked for.”

Schleifer noted that one of the most interesting things to watch throughout the integration has been the close alignment of business, where James sits, and technology, where Harvey and Benninger sit.

In any significant cultural shift, however, it’s just as easy to resist change as it is to jump the gun—something that James acknowledges he let himself do early on. Though the value of Finsemble was “blindingly obvious” to him, he had done a lot of background work before taking the idea to his traders, so while they began step one, he was already at step seven, wondering where everyone else was. He’s taken some more time to hone his pitch.

It’s worked so far. He and Harvey presented their interop strategy to people on the equity side of the business, and they’ve decided to take it up, he says.