The annual Securities Industry and Financial Markets Association technology show was the latest visible sign of an industry going through hard times. The number of vendors dropped by a third this year, compared to the two previous years, and the halls were less crowded.
About 200 vendors took booths at this year’s SIFMA Technology Management Conference and Exhibit, down from 300 both last year and in 2007, according to the industry trade group. Forty-three vendors were new to SIFMA this year. About 8,000 people registered to attend the tech fair, in line with attendance figures over the last half-dozen years.
Nonetheless, the exhibit areas appeared less crowded. And booths were packed into a tighter space this time round. Normally spread out over three levels at the Hilton New York, this year’s vendor fair had no need for the hotel’s smaller top floor conference space. In addition, only about a quarter of the large room below that top floor was devoted to booths. SIFMA set up a "theater" for talks by invited authors and industry executives on one end of that room.
Several large vendors sat out this year’s show. Most notably, SunGard did not take a booth. IPC and Orange Business Services didn’t have booths. Nor did Townsend Analytics, which is owned by Barclays Capital.
The low-key theme of this year’s tech show was "spotlight on technology solutions during challenging times." For the trading industry, however, vendors focused on what they had stressed in each of the two previous years: complex event processing and the low-latency processing of market data to support fast trading and decision-making.
Progress Apama, Streambase Systems, Aleri, Vyahu and other complex event processing providers were out in full force at the show, many with large booths. These firms provide software and tools that enable customers to scan vast amounts of data to look for trading opportunities. The technology can be used to search for price relationships between securities that are out of kilter, based on historical relationships; stocks or other products that are briefly considered low- or over-priced relative to their sector or some benchmark; and other signals that yield investment opportunities.
Order and execution management system makers also made a good showing at the tech fair. Fidessa, Portware, Tethys Technology, Advent Software, Charles River Development, Linedata Services, BNY ConvergEx’s Eze Castle Software and FlexTrade Systems all had real estate at the SIFMA show. Tradeware, SmartTrade, Indata, InfoReach and Nexa also had booths. Many of these firms announced new versions or upgraded features on their platforms.
Eze Castle introduced a new version of its Eze OMS. Among many new features, the Eze OMS now lets users send and receive stock loan requests from the order entry ticket, as well as view and manage compliance for borrowed securities through a redesigned short-locate function.
Software vendor Quod Financial noted that its smart-order-routing technology is seeing more demand from new players as the industry changes. According to Dhiren Rawal, managing director at Quod, mid-tier firms are now looking for technology solutions they once got from bulge-bracket firms. "Mid-tier firms are taking some of the control over their trading technology back as they get more order flow," he said. The firm works with the sellside, buyside and market centers in the U.S. and Europe.
EMS, algo and analytics developer Tethys introduced functionality that enables volatility traders using its Execta platform to minimize their cancel-and-replace fees, and maximize transaction rebates, at options exchanges. "This functionality is important for both high-frequency and regular traders," said Mary Cogger, director of sales at Tethys. Traders placing orders based on implied-vol levels need to change quotes continuously, making it critical to manage their cancels, which incur fees once the cancel rate exceeds a certain level at several exchanges.
This year, there was greater focus on options trading than there was in previous years. Aqumin, a new data visualization vendor, enables brokers to view a landscape of implied vols across U.S. exchanges, enabling traders to spot trends quickly.
Barry Vasudevan, marketing director at Orc Software, pointed out that his firm has seen a number of new firms enter the high-frequency trading area in options over the last six months to a year. Some of these firms involve traders who had been executing similar strategies at big banks and had left those positions.
Vasudevan noted that options market makers, under more competitive pressure, are now also "scaling their businesses beyond a single or two exchanges" to make markets simultaneously across more exchanges. Orc competes in the U.S. and Europe with Actant, probably the largest options market making technology firm.
