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June 30, 2002

Back to Front at Vendor Fair: A Popular Show for a Depressed Business

By Peter Chapman

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  • Back to Front at Vendor Fair: A Popular Show for a Depressed Business

Buyside traders shopping for front-ends and order management systems had plenty of choices at the annual SIA Technology Management Conference and Exhibit.

The annual event, held at the Hilton New York in June, brought out most of the major OMS vendors as well as some direct access players. While most of the technology was not new, many vendor strategies were.

Despite the market slump, the show was as crowded as in years past. Vendors occupied about 250 booths, the same number as last year, according to the Security Industry Association. An estimated 9,000 people attended this year, which was about level with attendance in 2001. One veteran booth jockey maintains, though, she saw fewer top tech execs wandering the aisles this year.

Multi-Asset Class

Beast Financial Systems, formerly TheBeast.com, was promoting its new equity trading system. Carved out of its mainstay multi-asset class front-end, the ETS is for hedge funds that trade through large brokers. Beast is marketing to large sellside firms with sprawling branch networks and far-flung customers. They, in turn, will push the system out to their clients.

"It's not for a boutique," said Craig Johl, a Beast vice president in corporate technology. "It's built to distribute to a large number of users."

Accessed over the Internet, ETS is a "thin" client. That is, it takes up just two megabytes of a user's storage. Many front-ends apparently require several gigabytes of space. Beast will operate the technology as a service bureau. Most of the heavy lifting is done by its back-end.

UNX was another attendee that has leveraged its existing technology to produce a new front-end. The West Coast agency broker is best known for its basket trading system and it finds most of its clients among the hedge fund community. It is now targeting single stock traders at both hedge funds and large asset gatherers.

UNX chief executive Randy Abernathy says the new system was built especially with the problems of institutions in mind. The product is not simply a warmed over day trading tool with little relevance for traders trying to move large blocks. Daytraders, of course, tend to spend their days making many small trades, capturing minute profits or losses on each.

Such functionality as STORM, for example, allows buyside traders using ECNs to peg their quotes to the market leader in the Nasdaq montage. Lehman Brothers, for example, may be the ax in a certain stock, but may not have the best quote at any given time. But because Lehman is likely to trade in size, it may make sense for a big trader to quote alongside Lehman rather than at the top of the book.

He is more likely to move his block that way, says Abernathy. "You want to wire yourself to the real liquidity," he said.

The exec adds that the new trading platform offers the same back-end functionality and power as UNX's program trading system, but is more "information-driven." Traders get market data, news and alerts.