Instinet today launched Newport 3, an upgraded version of its Newport execution management system. In addition to boosting the system’s performance and functionality, the broker has broadened the trading-related tasks that the EMS can perform.
Five years ago, buyside traders were the only users of the EMS, according to Jon Zanoff, global head of EMS strategy at Instinet. That’s no longer the case. “Now, the buyside trader is actively overseen by a head trader, while portfolio managers may be monitoring the overall positions and compliance officers are looking at the overall risk in a portfolio or across the firm,” Zanoff said. “The EMS may be consumed by different disciplines within the organization.”
Instinet built custom solutions for clients that needed specific reports or collaborative functionality in previous versions of Newport. Now, customers can configure that themselves. “The risk manager can look at exposures country by country, or the head trader can look at execution prices vs. their benchmarks,” Zanoff said. The head trader can also monitor junior traders more easily. “Significant vantage points on the order flow can easily be configured by the customer,” he said.
Newport is a broker-neutral platform used by about 1,200 firms across geographic regions. The user base ranges from traditional asset managers to momentum players and index-driven customers, according to Frank Freitas, global head of product strategy at Instinet. Some small and mid-size broker-dealers, as well as Instinet’s cash desks globally, also use Newport 3.
Almost all U.S. clients have been moved to the new platform, Freitas said. Newport 3 replaces the second-generation of Newport, which was released in 2004. In the current trading environment, what’s most important to customers is message throughput, broker neutrality, and the integration of real-time analytics, all of which Newport offers, Freitas said.
The EMS provides access to 80 exchanges, alternative trading facilities and dark pools globally. Freitas stressed that Newport is “truly broker-neutral,” and not just a “multi-broker” platform, which, he said, is the case for some broker-owned EMSs.
Newport 3 includes algorithms from more than 15 brokers. “We’re not biasing our own brokerage,” Zanoff said. “If Fox River or Credit Suisse would like to expose certain trading parameters on their algos in our trading system, they can.” He added that the firm is committed to handling its request queue for changes to brokers’ algos expeditiously and that the rollout of FIX ATDL functionality for algorithms should further shorten the time required for brokers to make changes to their algos.
Instinet also included a fuller set of transaction-cost analytics in Newport 3. In particular, the broker augmented its market-impact model. Freitas noted that the market-impact model will continue to be integrated into the Newport 3 application on a real-time basis. “While a trade is in-flight, a trader can now look at what he’s seeing in terms of realized impact vs. the estimate,” Zanoff said.
Newport 3 also includes new data visualization tools that help traders use and grasp TCA results more quickly. “A lot of the feedback we received from clients was about pre-trade and real-time analytics,” Zanoff said. “They wanted actionable feedback and they wanted it quickly.”
The new tools enable customers to see graphical depictions of expected cost, as well as “market impact vs. time risk,” he said. Another tool provides a visual analysis of liquidity in various destinations, enabling traders to see whether they’re sourcing liquidity from the right places. “This way they can consume a five-second view to aid them in their decision making,” Zanoff said.
One of the gaps in Instinet’s Newport offering, however, remains the lack of options and futures trading. Instinet said it plans to add listed options as well as futures trading on the platform by the end of this year. “We’re actively moving to include this capability,” Zanoff said.
