The Securities Industry Association Technology Management Conference and Exhibit rolled out the red carpet for traders.
Vendors touted market data applications, order management systems, routing networks, analytics, electronic brokerage, flat panel screens and alternative trading systems.
Nearly 50 of the 250 exhibitors packed last month into three floors at the New York Hilton catered to both buy-side and sell-side trading rooms.
As usual at the annual event, the big four market data vendors – Reuters, Bloomberg, Bridge Information Systems and ILX – were a formidable presence. Two had new products.
Debutantes
From Reuters comes Reuters Pro, a frontend strictly for the buyside. Traders, analysts and portfolio managers can use it to customize the screen layout of their market information. Quotes, news, charts, technical indicators, First Call data and even internally-generated research can be organized and manipulated in a way that suits the trader. That's a big improvement over the inflexibility of the current model, Reuters executives claim.
About 150 technical indicators are included in the package. Those include such popular analytics as the accumulation/distribution ratio, the volume-at-price ratio, the average directional change (ADX), the directional moving index (DMI), and the relative strength of a stock to the S&P 500.
Other features include alert messages and interactive charts. A trader can program the software to alert himself or his portfolio manager if a stock hits a certain price. Clicking a particular point on a chart reveals a database of that day's news.
"It allows you to get the whole picture of both the market and an individual stock," said Mike Naughton, senior vice president of equities sales at Reuters.
Ease-of-use is a big part of the pitch. A wizard' offers step-by-step instructions that guide the trader through the configuration process. Once set up, data and information is accessed by preconfigured buttons and set-up tabs rather than menu commands. Everything is point-and-click. There are no commands involved.
Although it's new to the buyside, the sellside has had a similar application for about two years. Reuters Plus is on the desktops of 50,000 retail stock brokers. Based on data from Waters MDI, Reuters hopes for a potential market of between 83,000 and 87,000 screens for Reuters Pro.
Easier for Traders
Bridge wants to make it easy for the trader to get his market intelligence as well. The market data giant is partnering with a small Chicago television broadcaster to form WebFN, a 24-hour Internet-based financial news channel. It will become available to any trader with a Bridge terminal.
WebFN's chief executive Bob Reichblum says his service is a supplement to the existing information traders get from their Bridge terminals. "WebFN will deliver the news you need, but might be unaware of because it is happening while you are busy doing something else," he explained. "It is a constant and live source." Reichblum is a former programmer at CNBC.
The nucleus of WebFN is a 12-hour financial news channel called "The Stock Market Observer" which is produced by Chicago's Weigel Broadcasting. The show has aired in the Chicago area since 1968. Its anchors will soon be interacting with Bridge's reporters and brokerage analysts around the world.
Cameras that can transmit over the Internet will be installed in 100 brokerages and Bridge newsrooms. That way breaking news and commentary can be broadcast quickly and inexpensively. The scheme eliminates the problem of scrambling for a satellite hookup at the last minute.
WebFN will have lots of competition. Bloomberg offers a similar service called BloombergTV to its subscribers. And cable news broadcaster CNBC is ubiquitous in trading rooms.
Market intelligence of a different sort is the focus of a grand new scheme to reorder the way the sellside interacts with the buyside and the way both sides interact internally. WorldStreet Corporation officially debuted WorldStreet Net, a budding Web-based network that links sales traders with buy-side traders; buy-side traders with their portfolio managers; and sales traders with others in the brokerage.
WorldStreet Net was created chiefly to enable the sellside to regain control of the distribution of its research from First Call and Multex. Many on the buyside use the services of these research aggregators to avoid dealing with hundreds of brokers. The sellside feels it is losing touch with its clients.
Website Failures
Attempts by the sellside to steer clients to research on their websites are failing, according to WorldStreet executives. The buyside has no time to search several websites to finds what it needs.
"Most Web strategies are dead-on-arrival," said Rod Hodgman, WorldStreet's chief operating officer.
WorldStreet Net is, in effect, a compromise between the solitary sellside Website and the amalgamated pools of Multex and First Call. It will allow brokerages to send out research, analysis and advice to clients, but it also allows the buyside to filter out anything it doesn't want. The buyside trader sees only what he wants from who he wants.
On the buyside, American Century, Scudder Kemper and Morgan Stanley Asset Management (MSAM) have already signed on to the new service. On the sellside, UBS Warburg, J.P. Morgan, ING Barings, and Deutsche Bank are trying it out.
MSAM will use the service to improve communications between traders and portfolio managers within and across several divisions. J.P Morgan will use it to improve communication between brokers and analysts. While the ultimate goal is to create a farflung network of sellside and buyside firms, the service is being rolled out slowly, attempting to solve internal problems first. The service is an extension of WorldStreet's customer relationship manager (CRM), a service bureau that helps sellside salespeople manage their contact lists.
WorldStreet Net will allow the sellside to deliver a complete package of information to the buyside. Once a research file leaves the brokerage it will pass through the server of a market data vendor (possibly Reuters) and pick up files containing news and prices. Once it arrives at the buyside it could also pick up a file of internally-generated research. The recipient will have a complete picture of the security in question. The technology that allows this is XML, or Extensible Markup Language. The so-called self-describing' nature of an XML file allows it to attach to other XML files.
WorldStreet is not the only vendor attuned to the Street's need to improve communications with its customers. Syntegra, the systems integration unit of British Telecom and top turret vendor, introduced a sophisticated CRM service called ITSlink Myriad at the SIA show.
Like traditional CRM software it lets sales traders keep track of past client meetings and phone calls, as well as their trade and portfolio information, addresses, telephone numbers, kids' names, etc. ITSlink Myriad goes one step further by maintaining an up-to-the-minute call log and the ability to pull in data from other systems at the brokerage. Order-entry modules from trading systems like BRASS, for example, can be incorporated.
Making it work is the evolving science of computer telephony integation, or CTI. That discipline involves the merger of telecom with computer technology. When a call comes into the trading room, the ITSlink Myriad automatically gathers the appropriate account information from various systems. Anybody could take the call and get up to speed on a client's particulars.
CTI generally suggests lengthy and complex projects, however. It is mostly used in call centers. Syntegra's Judith Dixon says, where ITSlink Myriad is concerned, one size does not fit all. An installation can only take place after a detailed consultation.
Internet Technology
OM Technology is another vendor hoping to add value to the sellside-buyside relationship. OM debuted OneWorld Institutional Order Management, a browser-based order routing system for sellside shops to offer their smaller clients. OM executives expect it to be used chiefly by such small buyside trading shops as hedge funds to send in their orders. Both the order sender and the receiver must be FIX compliant and plugged into a private network like that of IXnet or Radianz. The service promises to cut down on telephone time and errors. It's not the first of its kind to hit the Street, however. ITTI of New York is marketing a similar service that has found a home with top wholesalers Knight Trading Group and Herzog Heine Geduld.
Order routing of a more sophisticated nature was on tap at the booth of Charles Schwab's CyBerCorp division. CyBerCorp Institutional is the institutional version of CyBerCorp's smart-routing' product for daytraders. It provides direct links to ECNs and Nasdaq market makers. It seeks out the best possible price among the competing venues and automatically executes the trade within fractions of a second. Like OM, CyBerCorp also has competition. Tradescape.com and Jefferies offer similar products.
Nasdaq may have the most electronic links, but the New York Stock Exchange is catching up. Buy-side traders who use Eze Castle's ez-eXchange communications application can now receive electronic "floor looks."
Paper Notes
Floor looks are hastily scribbled notes made on the NYSE floor of quoted bids, offers, sizes and the names of the brokerages doing the quoting. They are traditionally written down on small pieces of paper and reported to upstairs brokers. They then report the data to their buy-side customers. Pen-enabled handheld computers are now proliferating on the floor enabling floor brokers to electronically transmit the looks. The buyside can now get their looks directly, bypassing the upstairs broker.
The floor looks application is one "plug-in" of several in Eze Castle's ez-eXchange platform. The system interfaces with the NYSE's Cassiopeia handhelds over a gateway service called fixchange.net, run by Javelin Technologies, Transaction Network Systems, and $2 broker A.W. Bertsch.
For buy-side traders more concerned with internal order management, SS&C is giving them another reason to consider its Antares 2000 order management system. Traders on the road, at home or in a satellite office can now tap into the central system through a PDA (personal digital assistant) device like Palm Pilot or the Internet. Officials at the firm say the service will be attractive to small buy-side shops such as hedge funds where the trader/portfolio manager is often away from the office. The technology lets them put trades on the blotter and check positions.
