Not Your Father’s NYFIX

Traders Magazine Online News, June 22, 2017

This is Part One of a Four Part Series Sponsored by Ullink

The mantra in real estate historically has been location, location, location. In trading, it’s connectivity, connectivity, connectivity. He who connects fastest, most efficiently and thoroughly trades first – and presumably wins.

It’s all about connectivity for the buy-side - plain and simple.

In the beginning, trading connectivity for the buy-side trader consisted of joining a peer-to-peer network, who took the institutional order and assisted in the routing of it to others within the P2P network – broker dealers, exchanges or ECNs. They in turn would shop the order and help it get filled.

P2P gave way to a new and unique way of order routing and transmission – the hub and spoke method – where the buy-side could plug into a single central distribution channel point and let it transmit orders to multiple sell-side destinations – even if they spoke a different variant of communication language. It provided a cheaper, faster, uniform and more secure method for trading. Thus, the first network was born.

These days, the buy-sides’ needs have gotten more complex – sending out thousands of orders per microsecond, to a myriad of brokers and lit and dark destinations – forcing networks to become faster, more technologically advanced, secure and reliable. And a few have managed to survive, such as NYFIX, now owned by technology provider Ullink. But for today’s trader, these new systems barely resemble those of the past. 

These new systems are not your father’s NYFIX. They are multi-service and -asset, becoming a one-stop shop of services looking to cater to the needs of the buy-side trader. Think of these new networks as a Amazon  for the buy-side trading desk ; there’s routing, services such as TCA (Transaction Cost Analysis),trade flow analytics, support and even post-trade matching functionalities extending STP to the full order flow

And the buy-side trader has certain demands that must be met by today’s connectivity providers, such as performance, reliability, transparency, ease of use, broker neutrality, security and customer support, that must be met if he is going to select a network. NYFIX and other providers, such as SunGard, SS&C, Thomson Reuters’ Autex, and ITG , have evolved or formed with these changing times and five needs in mind.

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