The buy-side trader must fend for himself these days.
In an age of reduced commission spend and fewer financial and personnel resources, institutional traders need to manage more of their trading workflows – from pre- to post-trade – on their own. And they need readily available solutions at the tip of their fingers – or on their desktop/mobile platforms at the click of a mouse or swipe. For more complex trades and settlement, the sell-side remains the preferred way to go, but for everyday run-of-the-mill trading, the onus to execute and process trades and analyze strategies, its the institutional traders responsibility.
So, how can the buy-side best leverage its existing technology and time to complete his daily tasks?
Enter NYFIX. Already on his desktop as his order and execution management system pathway, NYFIX is more than just connectivity. As already highlighted in previous articles, it also can assist in his post-trade and clearing needs, but that is not all. Even more complex applications are at his fingertips via the NYFIX portal. The Portal is an application-based traders storefront akin to the Apple store, and with its own apps, explained ULLINK’s Global Head of Business Development, Philippe Carr, in a conversation with Traders Magazine.
The NYFIX portal was our way to create an online platform where we can deliver more solutions to the buy-side and empower them, Carr began. We have vastly increased the tools that we offer to the buy-side when dealing with brokers, and the market in general. We’ve been strategizing our platform to let the buy-side do more and more via the NYFIX Portal. since they are already on the NYFIX system, this evolution allows us to offer the buy-side a larger universe of services.
So, how does NYFIX Portal work? As with other App Stores, those already on the NYFIX system can simply access the portal via online login and view upwards of 12 different apps a buy-side trader could use.
We provide our own services through that portal, Carr began. We’ve made available, online, a number of services that already existed. We’ve repackaged them and re-purposed them as apps to make their use very easy.
So, what kinds of apps are available? There are both NYFIX-branded and third party vendor apps to choose from. For example, there is NYFIX TCA which provides access to TCA reports produced by LiquidMetrix. Then there is NYFIX MONITORING, an app that provides traders, compliance and support people with a comprehensive view of orders, with powerful filtering and navigation features. Yet another is NYFIX RECON, which looks to help traders minimize risk by reconciling their executions against brokers or exchange dropcopy feeds.
The platform is an ideal way for us to deliver all of these services, and it is an ideal way for us to deliver our own services in a tightly integrated fashion, Carr said. The client logs on once to a platform on which they can consume all of our support services very easily and then, having created that platform, we can then integrate services from third party providers that our users use on a daily basis, with ease.
One of the apps NYFIX and Carr are most proud of is the Transaction Cost Analysis (TCA) app. Carr admits that NYFIX or parent ULLINK don’t have a total TCA feature. By working with third-party provider LiquidMetrix, NYFIX can now deliver this service, at minimal cost, directly to the buy-side trader. The app builds a specific TCA report for the trader, aggregated, formatted and ready for analysis.
Whether it is TCA, research, regulatory checks or connectivity management, NYFIX wants to offer it.
Another popular app is centered around research provision from Smartkarma. Smartkarma, Asias largest provider of independent research, is using technology to change how the investment industry creates, distributes and consumes research with its collaborative, cloud based platform. By being a part of the NYFX Portal, Smartkarma can now extend its reach and enable NYFIX clients to access its independent research platform, which charges a fixed subscription fee for unlimited access to all its research, unlike traditional research consumption methods that come with a huge costs attached.
Sonia Palmieri, global head of business development at Smartkarma, explained to Traders Magazine that her firms approach is to bring together buyside clients, and connect them with a wide range of independent research analysts across the world.
This ranges from individual analysts, who for instance, used to be analysts at investment banks to key research firms, large and small, Palmieri began. From one-man shops or two-man shops all the way up to likes of Morningstar, and it can also include data scientists and academics. Weve been compared to the Spotify model, but from an investment research perspective.
And what about the buy-sides need for MiFID II compliance? Palmieri said Smartkarma is in line with the requirements around MiFID II because it provides independence and cost transparency as well as consumption analytics into how clients are interacting with research.
The value proposition for buy-side clients is as follows, Palmieri began. First, it’s the independent nature of our work our research providers are arms length and can write their own unconflicted analysis of different subjects. The second is the technology – we provide a single entry login to access a wide range of independent research providers, which helps simplify IRP onboarding and due diligence processes for our clients in a time where many are shifting towards paying for independence.
And so far, so good for Smartkarma and NYFIX. Aside from being a standalone service a buy-side traders, analysts and portfolio managers can subscribe to, Smartkarma has only aligned itself with the NYFIX Portal for trading connectivity solution partners.
Yes, from our perspective. The partnership is about simplifying and integrating into buyside clients’ existing workflows, Palmieri continued. We’re trying to help streamline clients’ workflow by providing them easy access to our v innovative platformthrough ULLINK, which sits kind of at the center of the connectivity solutions. We feel that by integrating with them, we can provide clients with better and more efficient access to a suite of independent research.
A final app that NYFIX touts is Signal from third-party provider Advise Technologies. This app monitors and analyzes holdings, provides regulatory guidance, and generates regulatory alerts. Within the portal, the app makes the buy-side trader aware of the regulatory checks they need to know and comply with given their trading positions, according to Jeanette Turner, Chief Regulatory Officer at Advise Technologies.
You may be obligated to declare your holdings to a local regulator if youre trading on a particular market or jurisdiction and you become a significant shareholder in a traded issuer, Turner began. Through our partnership with the NYFIX portal, well be able to offer our Signal solution to a wide range of app store users.
And Turner thinks the app store approach is part of a new trend in the financial industry – especially for niche offerings such as Advises regulatory products.
Looking back to just a few years ago, there was little interest from buy-side traders for regulatory products, Turner admits, because compliance activities are seen as a back office function.
But now, the financial industry has evolved and regulatory compliance is of the utmost concern. As Turner sees it, the regulators want to see a culture of compliance and firms want operational efficiency. So, while traders primary business remains trading, they can simplify compliance reporting using new solutions such as those from Advise.
And according to ULLINKs Carre, this is just the beginning. Since the Portals launch late last year, 12 apps have been added since initial startup. But Carre said buy-side traders can expect more from NYFIX/ULLINK, and third-party providers in the next year.
Very clearly our mission is to grow the family of partners that we onboard into the NYFIX portal to give to our end clients, Carre said. There is no end to the number of apps that we can provide through the platform. Obviously 12 is a huge achievement over a year, but that universe will keep on growing. Very clearly, as of now we are trying to identify where the buy-side is increasingly taking responsibility and ownership.