Last January, I wrote a column titled “For the App Interoperability Movement, 2020 Will be a Big Year.” Un-objectively speaking, I think I was spot on, if I might say so myself. While the idea of “how” to achieve interoperability varies from company to company, creating a front-to-back offering for users is of paramount importance across the board.

Cloud architectures and data delivery systems have revolutionized the capital markets, though financial institutions have been slower to move to the cloud than other industries. While many firms will say they are fully embracing the cloud, there’s a canyon between where they’re at and where they’d like to be (or already think they are). But the fact is, as Lynn Martin, president of fixed income and ICE Data Services at the Intercontinental Exchange, recently told me, “gone are the days of the installed heavy terminal, heavy workstation.”

Still, interoperability has different definitions, depending on who you ask. Some banks, asset managers, exchanges, and vendors still want to build and control the central ecosystem, but ensure their systems can play nice with other third-party applications that clients want to use (BlackRock and Goldman Sachs). Others went out and bought platforms to merge with their own platforms (State Street and ICE). And others prefer to outsource the heavy lifting of containerization to the likes of OpenFin, Cosaic, and Glue42 (RBC and Barclays).

Enough of the preamble—you want proof that interoperability is the most important trend sweeping across the capital markets. OK, let me give it a shot. Here are a handful of major projects from 2020 that show how this app interop movement is getting on.

Goldman Sachs

Goldman’s Marquee platform is aimed at institutional investors, providing them with market views, hedging tools, and trade execution across multiple asset classes. The bank is in the process of creating an ecosystem that is more interoperable with other Goldman applications so that its users can get everything they need around market intelligence, risk, and execution in one place, rather than having to bounce around between different systems, applications, and content providers.

Last year, Goldman announced that it was moving Marquee onto Amazon Web Services’ cloud infrastructure. The end-state goal, though, is to create a managed-services offering, taking on processes for clients that do not deliver alpha and are costly. Anne Marie Darling, who oversees Marquee’s product and development, told WatersTechnology that this could include data sourcing and ingestion, or maintaining a security master, though the bank is at the beginning of this exercise and doesn’t know exactly how the managed service will take shape.

“Moving to the cloud is a multi-year investment for us. We are also very focused on looking at things that clients would want to outsource to GS that are costly for them to maintain and not providing alpha to their investment process. This is what we mean by the creation of the ‘financial cloud’ for our clients,” she said.

Before Goldman can do that, though, it must first expand and build on its partnership with AWS, and ensure that Marquee is interoperable with other tools and platforms offered by the firm for data management and analytics, pricing and risk services, and trading automation.

Marquee, which is now being enhanced using an “API first” strategy, has 65,000 monthly active users. From one screen, Goldman wants users to be able to see the bank’s internal data services alongside external data, and have that tied to risk and execution modules, so that users don’t have to bounce around.

“Most of our content, historically, in Global Markets was distributed via email,” Darling said. “We need to move that into a much more digital format, where you can search, sign up for alerts, tag certain items, and make it much more user-friendly, similar to what we see in the consumer market. That will be a key driver as we head into 2021.”

Intercontinental Exchange

While the Atlanta-based exchange has famously expanded its fixed-income footprint through acquisition, it has spent the last 18-or-so months looking to build interoperability between those various assets.

After making inroads in corporates, sovereigns, and US government bonds—ICE also owns and operates the NYSE Bonds fixed-income platform, thanks to its acquisition of the New York Stock Exchange—the exchange is now growing its ESG and munis offerings as part of a broader push toward building its own data assets while creating interoperability with execution tools.

“Fixed income has an opaque market structure, but if you put a lot of good tech and data around that, you can turn that into an electronic marketplace that is much more transparent and liquid,” Martin said.

Though ICE’s current focus is on combining its fixed-income assets, its end-game may be a much broader vision: With its equities and derivatives markets, and now its fixed-income data and analytics, ICE as a whole now has a unique insight into every aspect of an issuer’s financial performance. Data aggregators may also capture and aggregate this data, but ICE represents the source of the data—and owning the origins of that data is potentially even more valuable than the data itself.

The more interoperability it can create not only between its fixed-income assets, but with the rest of its asset-coverage base, the more analytics and services it can offer, making it a true cross-asset one-stop shop.

Refinitiv

Perhaps the most intriguing rivalry in the world of financial technology over the last two decades was the battle between Bloomberg between Thomson Reuters/Refinitiv over the trader workspace and terminal niche. That rivalry now appears to be shifting, as Refinitiv is replacing the Eikon terminal and Thomson One offering with Workspace, its next-generation data platform.

Workstation provides distinct content and capabilities tailored to the needs of different types of users via a front-end display and APIs. While Workspace’s GUI is the most visible representation of this shift from its legacy trading solutions, its strength is its API-driven back end that enables clients to make use of its data in other applications, depending on a firm’s needs and model.

Rather than a closed-off trading platform, Refinitiv is shifting toward a more open front-to-back workflow solution. This is happening as the London Stock Exchange Group (LSEG) nears closing its acquisition of Refinitiv.

If you look at what ICE and the Chicago Mercantile Exchange (CME) have done on their data fronts, they’ve essentially brought together exchange data for equities and derivatives, and, through acquisitions, blended traditional data with over-the-counter (OTC) content. They then combine that with enhanced communications tools to create something that is more front-to-back for traders. Refinitiv allows LSEG to follow suit, but the exchange isn’t going to care as much about the trading platform portion of the Refinitiv offering—it’s about data, workflows, and collaboration.

“Workspace is our response to a transforming industry—we’re clearly at the beginning of a new era,” said Mitko Yankov, global head of platform at Refinitiv. “Asset managers and banks are responding to margin compression, and are looking to drive greater productivity across their workforce, and their tools and capabilities.”

State Street

In an era of consolidation, one of the most signification acquisitions was State Street’s purchase of Charles River Development in 2018. After the Boston wedding, the bank is now looking to integrate its Alpha trading platform with the Charles River Investment Management System (IMS), which now serves as the front-office component of Alpha, while State Street supports the middle- and back-office roles.

With IMS, users can view their portfolios, run analytics, view products’ risk and investment profiles, and use the information gleaned to make a decision, scan different pools of liquidity in the market, and execute a trade. Middle-office functions center mainly on operations, and validating the quality of the transaction, position, and cash. From there, the back office steps in to communicate with the custodian that holds the securities, maintain a record of the transaction, ensure compliance, and update the accounting books.

“We really want to be open. There’s this theme of choice,” said Spiros Giannaros, now CEO of Charles River. “If you found the best-in-breed provider in the risk analytics area, or you just have a separate provider in custody, we’re interoperable in that you can take components of this solution without necessarily being bound to all of it.”

While the acquisition of Charles River was an important move, it’s all for naught if the bank can’t combine its data and expertise with the buy-side OEMS specialist, and vice versa. The key is to create a true front-to-back trading ecosystem so that buy-side firms won’t go sniffing around BlackRock, Goldman, SS&C, and Ion, among others.

Startups

Speaking of Ion (seamless transition!), it’s been two and a half years since Ion Group acquired Fidessa—and it hasn’t been an easy integration, to say the least. But where there is challenge, there is also opportunity.

Two former Fidessa employees have entered back into the fray, and the common thread connecting the two is OMS technology and interoperability. Steve Grob, the former director of group strategy at Fidessa and former Ion chief marketing officer, founded his own consultancy for cap markets fintechs called Vision57. And Mitchell Robertson, a former product manager at Fidessa, has settled in at another consulting startup, Leading Point Financial Markets, as a derivatives specialist.

For the latter, Leading Point is working with Glue42, a desktop application interoperability vendor that is working closely with Ion to extend the life of the trading platform by building new apps and open APIs that allow clients to integrate Fidessa into their fintech ecosystems, according a source who currently works at Fidessa.

Here’s how Robertson described how the trader-user interface works: a trader pulls up a stock portfolio on their screen. Near it is an options matrix, some charts, maybe a pricing model, all inside the Fidessa platform. Clicking on an instrument within the portfolio updates those other tools through Fidessa’s tracking facility, but the capability doesn’t extend to apps outside the platform. Glue42 joins the applications at the data and user-interface levels, so that in the Glue42 application, all applications—for example, Fidessa, Bloomberg, Salesforce, and Microsoft Excel documents—track together in the same fashion as Fidessa’s built-in tracking facility.

Grob is also working with Glue42, with the aim of assisting Fidessa and other legacy trading providers to help these companies to reinvent themselves.

The pair, whose businesses and projects are not affiliated with each other, are both looking to surf the next wave of capital markets interop—which, Grob noted, is even more pressing now that the coronavirus pandemic has forced traders into remote work, meaning they most likely have drastically less screen real estate at their disposal.

“There is a real sense that when people do go back to [their] offices, they won’t go back in the same way. So technology that talks to distributed workforces—connecting people, connecting different applications—is actually finding itself in a pretty good place” at the moment, he said.

FactSet

In the world of desktop application interoperability, OpenFin’s finance-specific operating system has become one of the—if not the—most popular options on the market for those also looking to tap into this paradigm shift. Proof can be found with two projects that WatersTechnology wrote about this year. Let’s start with FactSet.

The software solutions provider has made its Workstation research platform available in the OpenFin operating system. As Patrick Starling, director of sales engineering at FactSet, noted, the FactSet Workstation is available as an installed or fully web-based platform, and the web solution is getting “close to parity” with the installed workstation.

While the installed app is still the top preference for many users—such as those that want Microsoft Office integrations—the future state of Workstation is being driven toward the web.

“We’ve been trying to pivot to an open and flexible approach to all of our different solutions here at FactSet, so that means being open on the front end and embracing stuff like OpenFin,” Starling said. “Because we’ve moved to web technologies for the front-end, we can also do stuff like disaggregate the workstation and clients can take individual views or components of FactSet and embed them in their own portals, they can put them in OpenFin, and we’ve been building digital experiences for clients using all of those same properties.”

By embracing web technology, everything underneath the Workstation hood on the back end now has an API. This push began before the OpenFin partnership, but because of it, FactSet has been able to more quickly roll out browser functionality for the service. While the vendor has long used APIs, about 18 months ago, FactSet started rolling out a new generation of APIs, the first of which was an analytics API, which serves as the underlying calculation engine that powers Workstation’s portfolio analytics tool.

Barclays

The other OpenFin-related project we wrote about in 2020 was the one that involved Barclays, as it is revamping its BARX single-dealer, cross-asset electronic trading platform using the OpenFin operating system.

In April, Daniel Nehren, head of statistical modeling and development for equities at Barclays, told WatersTechnology that within five years, all trading desktops will be web-based, where they’ll be an assembly of external and internal applications integrated to provide a “best-in-class” trading environment.

The aim of the project, said Ying Cao, Barclays Markets’ head of digital product, is to be able to offer new features that are essentially embedded within the legacy technologies underpinning BARX, and to create a build-once-deploy-anywhere model.

She says that the buy side began to look at the single-dealer platform differently, in that they wanted access to information in different ways. Single-dealer platforms tend to be big and bulky, and they require users to choose how and where to access information. Integrated analytics was—and remains—a challenge.

“As electronic trading platforms continue to evolve, at Barclays, we see some critical components becoming increasingly important, such as clients’ ability to access our APIs directly, interoperability so that clients can access multiple applications quickly and easily, and their ability to use new digital tools, such as AI-powered alerts and chatbots,” Cao said.

Barclays first worked with OpenFin about three years ago to develop an application for its credit trading team, and later made a strategic investment in the company. In revamping BARX—which began in 2019—Barclays has deployed the OpenFin container around BARX.

When WatersTechnology spoke to Barclays about the transition, the OpenFin solution was in production for Barclays’ internal equities traders. The team was also building a “complete spectrum” of analytics around pre-, post-, and intra-trade analytics, where internal traders will provide feedback to create a robust package of analytics that can then be delivered to users.

The bank was also in the process of relaunching its “next-generation web portal,” which is built using a microservices-based architecture where clients can get analytics straight from the portal, and they can also directly interact with other Barclays products.

BlackRock

With its flagship Aladdin trading solution, BlackRock is aiming to create a stickier platform. The reason, said Robert Goldstein, chief operating officer and head of solutions at BlackRock, is that the asset manager is seeing demand for interoperability with asset servicers, trading venues, and market data providers.

“We are seeing that demand continue to grow on this ever-aspiring quest for true straight-through processing, consolidating the number of systems that people use to do their jobs to manage their processes, and, importantly, to maintain optionality in their counterparty relationships,” he said.

One way Aladdin was meeting the demand for increased interoperability was through Aladdin Studio, a suite of tools focused on integration and collaboration. Goldstein said this allowed clients to build custom apps directly on top of Aladdin.

“These Aladdin APIs, as they’re used by developers at BlackRock [and] our clients within the Aladdin community, are providing building blocks to create custom applications and integration tools for solving what may be their own idiosyncratic workflows,” while allowing the firm to embed content from Aladdin and other applications directly into the platform, he said.

And part of this interoperability project involved the integration of eFront, the alternative investment management software and solutions provider that BlackRock acquired in 2019, with the aim of providing clients with the ability to manage portfolios and risk across public and private asset classes on a single platform.

The integration project involves three streams, said Sudhir Nair, global head of BlackRock’s Aladdin business. First, the firm will continue to sell eFront as a standalone offering for private markets-focused clients. Second is the technical integration of Aladdin with eFront for clients that want to buy both. 

“We have created something called the ‘whole portfolio view,’ which is really a risk management view that blends risk exposures and performance, and public and private assets in one place,” Nair said. “It brings the data from eFront together with the risk-modeling capabilities of Aladdin. That’s a capability that’s out in the market today [June]—we have clients using it actively.”

The third area of focus involves leveraging eFront within BlackRock itself. Nair said it is important that the asset manager is not only the provider of the technology, but also its largest user. To that end, the company is implementing eFront across its private markets business.

“Clearly, the data associated with private markets is behind that of public markets,” he said. “And we think there is an opportunity to make that easier by creating a flow between GP [general partners] to manage investments with LP [limited partners] to invest, and having Aladdin and eFront sit in the center of that ecosystem.”

Tony’s 10 Favorite Stories from 2020

I don’t have children (thankfully!), so my baby is this publication (lame!).

As you may have noticed by this all-too-long column, my favorite topic is app interoperability. So for my “favorite stories of 2020,” I won’t include any of the ones mentioned above.

This is not a list of our most-read stories or the most important stories we’ve written, though there is obviously some overlap. Rather, this is a group of stories that I found to be interesting and that told unique stories. Some of these didn’t get the love they deserved; some were very popular—this is just my personal reading list for the year, and it’s in no particular order.

Refinitiv’s API Rebrand Rankles Users I never thought that a simple name change to an API could unleash such a substantial (and potentially costly) ripple effect.

‘Data Mining is Bullshit’—An Examination With the explosion of alternative data providers, firms love to talk about their data mining prowess. Then there are those, like Goldman Sachs’ Matthew Rothman, who believe that some of these claims are full of shit.

CME Reg Reporting Competitors Vie to Fill the Void Ahead of Withdrawal This was the culmination of a series of stories, but over the summer, Josephine Gallagher was breaking a lot of news in the regulatory reporting space around CME and Deutsche Börse exiting the space. This story looked at the vendors looking to gain new customers.

At the ‘Fringes of Realism’: Agent-Based Models Take Hold Among Quants Anyone who has ever had an in-depth discussion with a physicist knows that those conversations are both incredibly interesting and mind-numbingly arcane. This story took a complex subject (AB Modeling) and made it digestible.

TREP’s Tipping Point: An Examination of Refinitiv’s Market Data Platform Max Bowie has been covering the market data industry for two decades, and it’s a treat to read about a niche subject in which the writer is also an expert. This was also our most read story of the year.

Trading Technologies Unveils New Futures Market Data Feed This is truly an ambitious plan for TT. Rumors have it that Goldman Sachs is sniffing around the Chicago-based futures trading platform provider—I wonder what an acquisition would mean for this project.

Transforming NLP: A Look at New Tools Being Used by Banks This deep-dive into Google’s transformer-based NLP model called BERT reminds me of a story that you might read in Wired or Popular Science. If you don’t know what BERT is, read this because it’s revolutionizing the field of NLP.

HPR Preps Market Data Entry with Databot A hardcore hardware provider is not only embracing the cloud, but is for the first time entering into the market data space—yeah, you can bet that I found this development interesting as hell.

EU Consolidated Tape Support Wanes with Lack of Answers At the beginning of the year we looked at the problems facing the creation of a consolidated tape in Europe. Twelve months later and confusion remains.

Multicast: The ‘Holy Grail’ for Getting Exchanges to the Cloud The major cloud providers are hunting for a way to bring multicasting to the cloud. It’s an ambitious idea, and one that some believe is unlikely to happen in the near future. With that said, some exchanges really want this to happen sooner rather than later.

The image at the top of the page is Vasily Kandinsky’s “Painting with Green Center”, courtesy of the Art Institute of Chicago.