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April 30, 2001

Voice Technology Perks Up Top Desks: System Lets Pros Stay Ahead in Fast Markets

By Peter Chapman

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  • Voice Technology Perks Up Top Desks: System Lets Pros Stay Ahead in Fast Markets

After years of false starts speech recognition is starting to make inroads into trading rooms.

Three of the largest equity trading desks now speak, rather than type, their instructions for indications of interest and trade advertisements. Goldman Sachs, Credit Suisse First Boston, and UBS Warburg use technology from Novato, Calif.-based UmeVoice to send out more messages and to reduce errors. Merrill Lynch is currently installing and testing the UmeVoice system.

"In fast markets, traders tell us they can't type fast enough," said Adithya Padala, president of UmeVoice (pronounced "you-me voice"). "UmeVoice lets them send significantly more messages in these conditions. And the more messages they send, the greater the likelihood of doing that next trade."

Voice, or speech recognition, involves the conversion of spoken words into computer text. Its most common manifestation is in the automated voice response systems slowly taking over the duties of receptionists and call center employees. But it has popped up as an office automation solution as well, particularly in the medical, legal and financial fields.

Equity traders who work with institutional clients have targeted the sending of pre- and post-trade messages for voice automation. Invitations to trade and announcements of completed trades are typically typed out by dealers and transmitted to the buyside over networks provided by Thomson Financial's AutEx, Bridge Information and Tradeware.

Three kinds of messages are typically sent. Indications of interest' (IOIs) - both the bare bones interest messages and the more detailed super' messages - are transmitted to generate interest among the buyside for a trade. Advertisements' are broadcast after a trade to draw attention to a broker's trading prowess.

They're crucial deal-getters. But because typing them is time-consuming many aren't sent. "We do so much business here it is impossible to advertise everything we do," said Phil Marber, head trader at Cantor Fitzgerald. "I don't have enough people to advertise all the volume we trade." Cantor does advertise most of its big trades. It's the small ones that get away.

UmeVoice is targeting the top 30 brokers and is in negotiations with a major buyside firm, according to Padala. He lists three main selling points. First, and foremost, the technology enables traders to send considerably more messages, leading to even more transactions. A return-on-investment study done by the company found that traders using the product sent 50 percent more supers and interest messages. That translated into a 10 percent increase in orders.

Second, UmeVoice reduces both communication and input errors. Often, a position trader will shout out or scribble down his instructions. A clerk then inputs the information into the AutEx screen. The clerk, however, could misinterpret the trader. He could also type in incorrect data.

Room for Error

A trader speaking his message directly leaves less room for error. Of course, it also leaves less room for AutEx clerks. In fact, UBS Warburg has transferred one of its two clerks to another position since it started using the UmeVoice technology.

Finally, for traders who do type their own messages, the push-button ease of UmeVoice means they no longer need to break stride and type. They can talk and trade without interruption.