Commentary

Derek Edward Schloss
Traders Magazine Online News

What the !@#$ is a Security Token?

In this first part of a series, Mr. Schloss will begin to explain what a security token is by explaining how the building blocks of securities law are fundamental to understanding the tremendous value security tokens will one day unlock.

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June 30, 2003

More Tools for Traders

By Peter Chapman

Portware is also looking to grab a piece of the program pie. Three-quarters of its customers are hedge funds, but it's making headway on sellside program desks, according to co-founder and president Erik Goldberg. The system went live last year and handles options, futures and foreign exchange as well as equities.

Goldberg, a former hedge fund trader who also spent time on Lehman's program desk, founded the shop with technologist Ary Khatchikian. The system was constructed on top of the infrastructure built by Khatchikian for his last venture: an Internet-based order routing system called NeuronXT. The system has three broad components: a messaging infrastructure; a data model, built on top of the messaging infrastructure; and the GUI. Goldberg said he built the system because, as a trader, he couldn't find one to buy. Those available were either too clunky or too costly. "This GUI was written by traders for traders," said Goldberg.

Order Management Wannabes

Two vendors best known in other fields are expanding into the sellside order management systems space. Micro Design Services is known for its work on the nation's stock and derivatives exchanges. It sells wireless handhelds to brokers on the floor of the New York. It also built BARS, the order management system used on the floor of the American Stock Exchange.

The market for OMSs on the floors of exchanges is "limited," according to MDS execs. MDS is now pursuing upstairs listed desks. The new system, unnamed as yet, will be in production by the end of the summer, according to Lisa DeLuca, an MDS product manager. The system will allow basket as well as single stock trading and incorporate touch screen technology. The target market is small- to medium-sized broker dealers.

British FIX engine shop SolutionForge hopes to leverage its expertise in FIX engines to make a splash in the sellside OMS space. Solution Forge has sold FIX engines since 2000. Most of its 300 installs are in the U.S. That's despite the fact SolutionForge has no U.S. office! Most engines are marketed to the buyside by industry giant Advent when it sells its popular Moxy OMS.

SolutionForge now plans to market a bare bones OMS to smaller sellside shops. Some of these brokers are under pressure from their clients to accept order flow electronically. But they are unwilling to spend the big dollars necessary for a system such as BRASS. In order to drive costs down SolutionForge partnered with Microsoft.

The low-cost route meant, of course, a trade off between functionality and time-to-market, according to SolutionForge execs.

"It would've taken twice as long to build using conventional technology," said SolutionForge's Kevin Lee. SolutionForge claims to have one customer in the U.S. and one in the U.K. for the newly-christened FIX.NET Trader. SolutionForge has put a lot of emphasis on IOI (indications of interest) functionality. The vendor says it has made it easy for brokerages to direct IOIs to specific buyside desks with "easily manipulated distribution lists."

That's rather than simply broadcast the IOIs to multiple parties, many of which are unlikely to be interested.