Some traders are creatures of habit and balk at new technology.
But one area of technology that seems to escape this technological paranoia is order management systems (OMS).
"OMS is the hottest issue for traders on the buyside and the sellside," according to Bob Iati, an analyst at TowerGroup, the Needham, Mass.-based consulting company.
That's why financial software vendors are clamoring to provide the three critical components of an OMS: position management, order routing and data management and design.
"Traders live and die by their order management systems," Iata said. "There is no shortage of vendors to provide them with solutions. I call it the mission control' of the trading desk."
Most OMS vendors aim to provide split-second trade routing to a single venue. That venue is typically designed to offer both the best execution and the best sellside and buyside integration.
Two vendors stand out in the crowd, according to Iati. They are SunGard's BRASS and Royal Blue Financial's Fidessa OMS systems. These are the OMS' most widely used by traders, he said. He said they offer the best chance of providing the three critical OMS components a dealer needs.
SunGard is capitalizing on brand name and product with the June, 2001 release of its PowerNet. This could be a direct threat to Nasdaq's SuperSOES, SelectNet and other direct access programs, according to some observers.
Billed as the first independent equity order delivery network for securities dealers offering direct access to multiple market centers, SunGard officials say that PowerNet delivers orders for execution of all types of equity securities. The destinations include ECNs, market makers and other trade execution venues.
The software also provides direct access to ECN limit order displays and market maker quotes. It gives traders complete views of the limit-order displays of participating ECNs.
"PowerNet provides a single point of access to execution systems of all types of equity securities worldwide," said Tom King, president and chief operating officer, SunGard Trading Systems/BRASS.
King cites former SEC Chairman Arthur Levitt's call for "all market participants to move toward open books" through a "voluntary private sector initiative."
The SunGard executive said it is clearly preferable to link competing liquidity centers than to attempt to regulate market competition. But not so fast, counters London-based Royal Blue Financial. Its Fidessa OMS nipped BRASS in a recent TowerGroup OMS performance comparison.
Open System
"Both products are well made and well known, but I'd give Fidessa the nod because of its open architecture," said Iati, after he tested "hundreds" of different functions in both applications. He adds that Fidessa's frontoffice and backoffice data functionality performed better than BRASS. Still, BRASS had better compliance features, he contended.
"Fidessa was easier to integrate, had better communications between the buyside and the sellside, and offered better routing services," Iati said. "BRASS can operate in a more proprietary fashion that other systems. While a Royal Blue type system will route your trade to wherever it needs to go, BRASS may capture some trades but not send them along for execution. I'd say they route 70 percent of trades to the appropriate exchanges."
Part of the problem for Fidessa, and all other OMS vendors on Wall Street, trading pros say, is cultural: Traders don't like to learn a new system, especially if they don't have to. "Traders are creatures of habit," said Omar Amanat, chief executive officer at Tradescape, which purchased the MarketXT trading technology in August. "They'll stick to what works, no matter how old it is. I know traders who would rather use SelectNet than a proprietary OMS system. It works for them and that's what counts."
Nonetheless, OMS vendors are taking their trading technologies to new heights. Consider Townsend Analytics. The Chicago-based developer of the RealTick trading platform plans to release a trading system that protects traders from executing the wrong orders (among other features). "We're using stage orders to defend traders against errors by placing financial software functionality not just in the frontend but in the backend as well," said Christina Sciotto, RealTick's product manager. "If a trader wants to buy 100,000 shares of Microsoft we can set it up so that particular trade is the only one that the trader can execute. It won't let him sell, or buy Dell instead. It's a secure way of making sure that traders don't push the wrong button."
RealTick offers traders direct access to the Nasdaq market via Archipelago, Island, REDI, SelectNet and SOES while routing orders for listed securities to primary or regional exchanges or through several executing brokers.
Winnowing down the amount of information traders have to deal with is another high priority item. In hopes of answering that call, ProTrader is developing a new feature for its trading platform. It cuts down on the info-blather traders don't care about and gives them the exact data they need to execute a trade.
"There are two things traders always ask for, quick quotes and fast execution," said James Herbold, chief information officer at Austin, Texas-based ProTrader. "We also add features that gives traders the tools to find market points that might be good trading opportunities, whether they're on the NYSE, Nasdaq, or on an ECN. We'll give them data on the trades they want, when they want it."
Another player that has joined the OMS crowd, Neovest, has placed a similar emphasis on thinning out' non-critical trading data.
"Trading volume has doubled in recent years and traders are overwhelmed with information," said Mark Scott, chief executive at Neovest. "We want them to filter out unnecessary data and concentrate on the important stuff they need to make money."
Knight Trading Group recently opted for Neovest's trading platform for its institutional trading desk in London. That's primarily because of the software's fundamental and technical filtering and alert system that covers all trading scenarios in real-time, according to Scott. The Neovest system is capable of monitoring over 300,000 tickers in realtime.
Opening Field
ECNs are getting into the OMS act as well. This past summer, Archipelago and Macgregor aligned to offer institutional investors improved electronic order execution services.
Under the terms, Macgregor is integrating Archipelago's trading platform technology into its extended order management systems, giving institutional traders an additional route to liquidity in all the major exchanges.
In the past, traders using Macgregor had to manually check market prices for a single stock. Archipelago, for example, had to be accessed separately through a link that Macgregor provided in its service.
With the upgrade to a single platform, institutional investors have one-stop shopping capabilities, accessing all of the stock's prices and matching orders in seconds, saving time and increasing accuracy.
Overall, OMS vendors are pushing to attract traders' attention. The market may be receptive. "I think traders are ready for a thinned down, light version of what SunGard and Royal Financial are offering," Iati said.
