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January 1, 2004

A Stock Vendor Moves Upstairs

By Editorial Staff

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  • A Stock Vendor Moves Upstairs

Faced with slowing growth in its core operations, a vendor to the nation's stock and derivative exchanges is moving into the upstairs market.

Micro Design Services has built order management systems for the American Stock Exchange, the Philadelphia Stock Exchange, the Pacific Exchange and the New York Board of Trade. But the Parsippany, N.J.-based shop has few major projects on the horizon while future revenues are dependent on less lucrative maintenance and upgrade jobs.

So, MDS has begun to promote its OMS technology to the trading desks of small broker dealers. To win over desks with basic needs and small budgets, the vendor is counting on trader dissatisfaction with their existing OMSs and its reputation as a builder of mission critical systems.

The low end of the upstairs market is controlled by vendors SunGard Trading Systems, NYFIX and a few others, but their grip is shaky. Complaints over customer service are legion, providing an open door for newcomers. Few have made it, however. Eagle Software, Nasdaq Tools and Tradingear, for example, did not succeed. The rising star at the low end of the market may be Bloomberg Tradebook which, in the past two years, claims it landed 30 new accounts.

MDS began life 13 years ago building wireless handheld applications for New York's commodities exchanges. In 1993, the firm upped its profile in equity trading when it built the New York Stock Exchange's e-Broker handheld system.

The handhelds, essentially mini-order management systems, integrate with the Big Board's own OMS, the BBSS. Floor brokers use them to receive orders and report executions. Of the 600 or so handhelds on the NYSE floor, about 500 are e-broker units.

MDS is also known for introducing electronic floor looks to the Big Board. The software allows floor brokers to jot down looks - scribblings of market intelligence - and send them to upstairs traders.

MDS is a partnership with 32 employees. The firm has landed one customer for its new OMS: a small New York brokerage which it declines to identify. Traders Magazine's technology editor Peter Chapman sat down with MDS president Roman Szymansky to discuss his OMS initiative.

Traders: Is it unfair to call you a wireless vendor'?

Szymansky: It is unfair to call us that now. In the beginning, we worked exclusively on handheld products and wireless technologies. We were pioneers in that area for the exchanges. But that has become a much smaller piece of the business. Wireless components have become more commoditized. While in the beginning you had to do a lot of work to get wireless to work. Now, you can go to Proxim or to Cisco. You can get off-the-shelf products that are more sophisticated and more mature. More network people can figure them out now. So we have focused more on our applications software and our systems that utilize wireless.

Traders: So then you never really branched out' into order management systems from wireless?