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December 1, 2001

The Big Brother Trading Platform? Full Automation for Commerzbank

By Brian O'Connell

Also in this article

  • The Big Brother Trading Platform? Full Automation for Commerzbank
  • Page 2

Investing in an equities tradingplatform can be a high-risk affair, especially with a relentless squeeze on profit margins in the U.S.

Some firms may prefer to take the plug-and-play' approach when thousands of dollars are on the line, and traders are ambivalent about technological change.

So it seems for Commerzbank Capital Markets.

The Frankfurt-based trading investment bank recently installed a new equities trading platform, a platform that is designed to streamline and fully automate its desk from front to backend.

Commerzbank is betting that the system, Fidessa, from London-based Royalblue Pfc., will improve the efficiency of its global trading operations, which spans the major markets including New York and London.

"We wanted a good order entry system that could help us build an audit trail that is electronically driven," said Michael Lewis, head of Commerzbank's European sales for equity trading. "We wanted a trading platform that could place orders on multiple stock markets, speedily and efficiently."

"In short we were looking for a nice universal trading package for entering orders and following transactions," he added.

Is Fidessa the system? Commerzbank certainly thinks so. For one thing, the system has a solid track record in sellside equity trading circles.

"When you think about electronic tracking of orders and you trade simultaneously in multiple markets, Fidessa is at the top of the list," Lewis said. "I'm not saying we didn't have some tweaks and glitches but, by and large, we're happy with what we've seen."

Fidessa enables the investment bank to trade across the world's major equity markets. The system allows Commerzbank traders to trade simultaneously on 30 global stock markets while monitoring all the firm's trades, positions, exposure and risk. Fidessa also offers Commerzbank an integrated suite of functional applications that manage and automate front and mid-office business flows and provides a global execution network. The trading platform includes fidessaNet, touted by Royalblue as the world's first electronic transaction network (ETN) for equities.

Commerzbank joins a who's who' of investment banking firms that have signed on to Fidessa. The group includes HSBC, Bear Stearns, and Merrill Lynch.

Match Game

Fidessa's ability in matching orders with their executions is a favorite with traders. That's no mean feat because traders may work several orders in the same security throughout the day for different customers. The system also monitors trading variables such as the customer, time, price, quantity and order instructions.

Royalblue officials say that Fidessa is the only equities dealing system compatible with trading in U.S., European and Asian equity markets and this gives it a major advantage over rival offerings.

Prior to its Fidessa implementation, Commerzbank relied on a cash equities trading system from Iona Technologies that featured a middleware component called Orbix. That integrated all of the company's front and back office software.

That system, in turn, had replaced Commerzbank's traditional paper-based trading system in early 1999.