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August 9, 2006

NYFIX Takes Aim at AutEx with New IOI Product

By Michael Scotti

NYFIX, operator of one of the largest trading networks in the industry, is moving into the indications of interest (IOI) game.

The vendor and electronic brokerage has signed 35 broker-dealers, including Goldman Sachs, Morgan Stanley and Citigroup, to a new service which promises to improve the way natural liquidity is shopped to the buyside. The move puts it into direct competition with Thomson Financial's AutEx service, the oldest IOI network.

NYFIX claims its platform is better than the status quo because its indications can be targeted to specific clients, as well as the fact that brokers cannot see each other's indications. Only clients will see them. Current IOI vendors AutEx and Bloomberg do not have these targeting capabilities, said Andy Wilson, global head of NYFIX's FIX Network Division.

NYFIX's product also issues a report card about each client's activity, which essentially shows a client's success rate. That's a ratio of the number of indications received to the number of actual trades those messages generated.

Brokers in the system are taking advantage of NYFIX's installation base of 250 money management firms. Either the client's order management systems or NYFIX's Sidekick platform filter out the non-matching indications, Wilson said. Clients, however, still contact their broker-via phone or electronic message-when an indication matches up. "Clients can't trade on the wire yet, but that's where everyone wants to go," Wilson said.

NYFIX plans to validate the accuracy of the data on the system by comparing information supplied by both the brokers and the exchanges each day. Interestingly, NYFIX's product provides the buyside with a report card of the brokers that measures how real' their indications are.

This summer, NYFIX expects to offer advertised trades on the network and by the end of the year, historical data of all advertised trades, Wilson said. NYFIX's thinks its product could make strides at the expense of AutEx, which has long been subject to industry-wide criticism about the authenticity of its indications and the accuracy of its advertised trades. The complaint is that Thomson's AutEx has not adequately policed the information brokers put on the system. AutEx officials declined comment. But industry sources say that Thomson is about to roll out a new version of AutEx. NYFIX says its product will cost less than AutEx's by about a half to a third.