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FlexTrade Targets Sellside with New OMS
Traders Magazine Online News, August 1, 2008
FlexTrade Systems is angling for a foothold among broker-dealers overwhelmed by the IT demands of increasing transaction volumes and low-latency algorithmic trading--but this time, not for FlexTrader, its multi-asset-class execution management system. The company is now drumming up business for FlexOMS, its new sellside order management system.
Earlier this week, FlexTrade unveiled FlexOMS, an OMS for broker-dealers built on the program-trading credentials of the company's FlexTrader EMS. FlexTrader is a high-volume cross-asset-class execution platform used by 120 brokers, institutions and hedge funds globally.
FlexTrade has hitched its star to the growing need for program trading at sellside shops. "Program trading has become just as important as single-stock and cash trading for many firms," said Vijay Kedia, FlexTrade's founder. "We now have a full sellside OMS solution. Brokers can use FlexOMS for cash trading, programs and other asset classes."
FlexTrader was designed as a program trading platform for buyside and sellside firms. "Once we had program trading, we became familiar with the workflow," Kedia said. Many of the nearly 40 program trading desks now using FlexTrader built those desks in recent years in response to buyside demand, according to the exec. Program trading, he said, enables brokers to provide cheaper rates and more automated basket trading to customers in an increasingly fast-paced electronic environment.
"As an EMS, we built bridges to interface with brokers' OMSs and did custom integrations with the back office, accounting and compliance solutions [at various firms]," Kedia said. "Now we've gone the next step and created a full-service solution for sellside desks."
That next step took two and a half years to complete. Rajiv Kedia, the company's associate founder (and Vijay Kedia's cousin), ran the 15-person team of technologists and business analysts that developed FlexOMS. The company, formed in 1996, has more than 200 employees.
"We took our system and added principal trading, agency trading, crossing, compliance reporting, OASIS integration and market making," Kedia said. "Building an OMS requires big input from the sellside and a lot of business knowledge. The barriers to entry are much higher than for an EMS."
Indeed, the sellside OMS business isn't a terrain firms are scrambling to enter. The two leading OMSs for brokers are SunGard BRASS and Fidessa. NYFIX last fall got out of the sellside OMS business, moving its 15 broker-dealer OMS customers over to Citi's Lava ColorPalette platform. A number of smaller OMS providers have carved out niches in the industry, serving small and mid-tier firms.
But FlexTrade may have an advantage over some pure OMSs. "As an EMS, they're one of the leading firms," said Matt Samelson, a senior analyst at Aite Group, a research firm based in Boston, Mass. "They have the name recognition and a reputation for putting out a quality product. That might get them in the door in some places." He adds that FlexOMS is targeting mid-size broker-dealers and integrates with any front end, and not just FlexTrader.
FlexOMS currently has two clients: Weeden & Co., an institutional broker with a big program trading operation based in Greenwich, Conn., and another mid-size broker-dealer with a large program trading desk, according to Kedia. Weeden replaced its BRASS OMS with FlexOMS across the entire firm earlier this year. The other broker is using FlexOMS on its program trading desk, Kedia said. Weeden declined to comment for this article.
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