Swiss Bank Licenses FX MIPS; SBC/OC Is Likely U.S. Site

Swiss Bank Corp. has signed a global licensing agreement with New York systems integrator FD Consulting Inc. covering FD's Realtime MIPS market data distribution and workstation system. The most immediate candidate among Swiss Bank's North American trading operations for receiving MIPS is SBC/O'Connor Services L.P. (SBC/OC), which was formed by the bank's recent acquisition of Chicago-based derivatives trading firm O'Connor Associates.

The signing of the licensing agreement coincided with Swiss Bank's decision to merge its trading operations with those of SBC/OC. The pact follows the installation of FD's MIPS at Swiss Bank's trading room in New York, where it is being used to supplement an existing Micrognosis Inc. local data distribution system (TST, June 3, 1991).

Under the so-called global enterprise agreement, Swiss Bank will have unlimited usage of MIPS at any office or subsidiary's office worldwide in return for a licensing payment to FD. The contract, which runs until the end of 1994, applies to existing and future MIPS products.

According to Marcus Messmer, executive director of Swiss Bank, the licensing agreement will cover full-blown MIPS installations rather than merely supplementary projects, as in New York. In the Big Apple, MIPS is providing access to data feeds from Reuters Holdings PLC and Telerate Systems Inc.

Messmer says the bank plans to install MIPS at its sites in Geneva, Zurich and Basel, its headquarters. Swiss Bank currently uses Micrognosis data distribution systems at these sites running on Sun Microsystems Inc. workstations. MIPS will be used to supplement these systems a la New York in Geneva and Basel, which have around 100 traders apiece dealing in foreign exchange, equities and fixed-income securities.

In Zurich, however, Messmer says the bank plans a fully fledged MIPS installation supporting 300 traders, with a live date of early 1994. Eventually, MIPS will play a role in all of Swiss Bank's trading rooms worldwide, including those in London, Tokyo, Hong Kong and Singapore.

Before signing with FD, Messmer says the bank checked out systems from Micrognosis, Teknekron Software Systems Inc. and Reuters Holdings PLC. One factor giving FD's MIPS the edge, Messmer says, was its use of an object-oriented distribution architecture.

MIPS distributes objects across a local area network by use of so-called self-describing messages. These allow the user to define an object, say an options price, that is to be applied to a specific application. Applications get data updates via the self-describing message they are expecting to receive, allowing the use of proprietary as well as vendor- supplied market data, an important consideration for some of Swiss Bank's trading operations, particularly in such instruments as OTC derivatives.

MIPS is currently being studied for installation at SBC/OC. Messmer says no firm decision has been made. But the adoption of MIPS is likely to proceed in light of the merger of its trading operations with the bank's.

SBC/OC Services L.P. was formed in December 1990 with a stated mission of providing technology services to both Swiss Bank and O'Connor Associates. Leveraging O'Connor's technological and market-making expertise and SBC's global presence (not to mention capital), SBC and O'Connor identified interest rate management products, non-U.S. equity derivatives and FX options as key product markets it would seek to dominate. Last week, Swiss Bank announced that its share of profits from the SBC/OC operation--107 million Swiss francs (about $70 million)--had greatly exceeded expectations. Currently, O'Connor specializes in options and futures trading, with substantial listed and over-the-counter equities operations and a presence in capital markets and foreign exchange.

O'Connor inched closer still to SBC in January when the two announced plans to merge their capital markets and Treasury trading operations. The merged trading operation will be run out of New York. The group -- dubbed the Capital Markets and Treasury (CMT) operation -- will be part of Swiss Bank's International & Finance Group. CMT will be managed by an executive committee having two members from Swiss Bank and one from O'Connor.

Messmer says that while O'Connor will continue to trade the same instruments it trades now, the firm's traders will require a wider range of real-time data services relating to all the instruments Swiss Bank trades. The bank plans to pass its order book around the globe; O'Connor will require the data to monitor the firm's global positions in real time.

SBC/OC's statement of direction is "NeXT on desktops, Suns as servers," says Robert Wilen, vice president at SBC/OC. O'Connor was one of the first trading firms to use NeXT computers (TST, Feb. 11, 1991). Its rival -- Chicago Research & Trading Group Inc. -- recently opted to follow the NeXT trail for its 500-position operation in the Windy City (TST, Jan. 13).

Messmer says Swiss Bank itself is committed to the NeXTstep applications programming interface, adding that he is personally pressuring FD to port fully its MIPS software to NeXTstep. FD already has worked with NeXT at UBS Securities Inc.'s New York derivatives desk (TST, May 20, 1991).

Wilen says there is no particular urgency to the timetable of the implementation of MIPS on NeXT at O'Connor. A spokesperson says that SBC/OC currently owns some 650 Sun workstations and servers, 300 NeXT workstations and several hundred additional IBM microprocessors and Apple Computer Inc. Macintosh personal computers.

In the case of the proprietary applications for which O'Connor is renowned, Sun Microsystems Inc. SPARCstations and Sun-3 workstations predominate. O'Connor distributes data locally itself from an in-house ticker plant. Using gateways to other applications systems, price data from Telekurs (North America) Inc.'s Ticker feed is broadcast to a series of subnetworks and cached as needed.

O'Connor was a long-time proponent of Symbolics processors running Lisp, and still has a number in use. Although they concede that the hardware was difficult to support, and that Symbolics' shaky financial condition make the point moot, O'Connor developers still compare the elegance of the Symbolics/Lisp developing environment to the NeXTstep environment that is cited as a major reason for buying the NeXT hardware.

Thus far, however, the majority of NeXT workstations -- some 300 to date -- have been deployed for office automation applications, such as word-processing, electronic mail and spreadsheets. Wilen says NeXT was also chosen as O'Connor's next-generation platform in part because NeXT was committed to providing the sort of productivity applications that have been largely neglected by Sun, and that keep PCs and Macintoshes competing for space on O'Connor traders' desktops.

Moving ahead, SBC/OC is developing trading applications for NeXT workstations on an as-needed basis. The first group to benefit was the Off-Balance Sheet group, which trades interest-rate products and Treasury options. Installed in April last year, the system handles deal-input, position- keeping and pricing functions. Because data is generated in this OTC market by deals confirmed by the group's 40-odd traders by phone, the system doesn't use any external source of real-time data.

The latest pilot, in progress now, targets the SBC Risk Management Advisors (RMA) group, formed as part of the alliance with O'Connor to bring its risk management expertise to Swiss Bank clients. In Chicago and three European cities, the group uses SBC/OC-developed applications on NeXT worksta- tions to price derivatives and execute orders.

At the same time, the group relies heavily on presentations given at customer sites using 386-based Compaq Computer Inc. laptop microcomputers running Windows. As an interim measure, the group will use as much of the same off-the-shelf presentation and productivity software on both PC and NeXT platforms.

While new native applications are being written to NeXTstep, SBC/OC is considering whether to rewrite Sun applications for NeXT. As part of the evaluation, SBC/OC is piloting X Windows server software from a number of third- party vendors running on NeXT.

The emphasis on risk management at O'Connor's 200-position floor in Chicago makes for a relatively quiet atmosphere. With the appropriate software tools, sudden market moves need not cause panic, says the SBC/OC spokesperson.

Along with the proprietary tools in use on the Chicago floor, traders there use a Reuters/Rich Inc. video-switch to tap information and transactional services including Reuters' Equities 2000 and Dealing 2000-1, and services from Knight- Ridder Inc., Thomson Financial Services Inc. and Track Data Corp., among others. During a recent visit to the floor, one trader on the forex desk viewed Cable News Network (CNN) on a Rich monitor.

The floor retains a smattering of native equipment, including Quotron Systems Inc. Q1000 terminals on the equity desk and a Bloomberg L.P. terminal on the risk management desk.