As the line between telephone and computer technology continues to blur, the relatively simple-looking banks of telephones on a trading desk are being transformed in the process. These trading turrets, as they are called, are evolving into PC-like devices that seem more suitable on a sci-fi show like Star Trek than on a trading floor.
Are you a professional trader who uses a turret? Then hang on to your hat. The New Age turret may bring us where no man has gone before.
"More computer power combined with more exceptional speech recognition and heavy research into language translation will probably push [trading desks] more quickly toward a global trading market, operating 24-hours a day," said Robert McFarlane, president of Interport Financial, a division of Shen, Milsom & Wilke, a technology consulting firm based in New York.
The two largest U.S. turret suppliers, both based in New York, IPC Information Systems and BT North America, a subsidiary of the U.K.'s British Telecom, are releasing a battalion of tools that provide more capabilities than some veteran traders ever imagined possible.
Among the gizmos: voice-recording over a handset; a customer-profile capability triggered the instant a customer is reached via telephone; a system that allows floor traders to hear each others' voices as well as see each other on an intercom video; and a tool that simultaneously allows traders to view video clips, search text, and hold a voice conversation over the Internet.
Until recently, turrets were primarily used for making conventional telephone calls. But as the cost of manufacturing computer chips continues to decline, the processing power and speed that were once the exclusive domain of costlier PCs will be better utilized within the turret.
As a result, this transformation will allow a turret to handle video and market data, as well as voice over an Internet Protocol, or IP, and Internet-based information such as e-mail and web pages. Trading turrets, in fact, may evolve into peripheral network appliances that provide a stunning telephone-style user interface to the information highway.
"Today's turret is not particularly intelligent," admitted John Wayt, vice president of product development at IPC. "But with the ability to purchase increasing [processing] horsepower for the desktop at reasonable prices, the intelligence model is moving to the desktop."
"You'll see turrets and a host of market- data screens increasingly converging into a single desktop appliance that will be used for trading," he added. "That's already beginning to happen."
At a conference hosted last month by the Wall Street Telecommunications Association, an association based in Redbank, N.J. and supported by telecommunications executives at financial-services firms, McFarlane outlined a number of technology trends likely to impact how trading rooms communicate visually and orally.
Larger flat-panel display screens will be available in the coming months with ever-improved glare reduction and enhanced resolution. Speech-recognition systems are being tested to help bridge global barriers by translating foreign languages.
Speech recognition is still problematic at the trading desk, however, because of background noise levels. Developers are now exploring ways to combat ambient noise in the trading room, and are creating systems that are entirely speaker independent.
McFarlane said that technology will eventually allow analysts to interview foreign companies in any language without relying on human interpreters.
In another development, Barclay's Bank of London began testing video-viewing headsets, now being used in the military, to see if they might be useful for traders who want more mobility in their trading environment. McFarlane said that with these kinds of devices, scanning capabilities in the headset might be used to identify the trader by a retina scan.
"Wouldn't it be interesting if you could combine retinal scanning with the heads-up display so that as you look around, you control the image and view things in different parts of your screen as you work and talk with other traders?" he asked with awe. "It's probably coming."
"I can't say if it's five or ten years – or even in our lifetimes – but I would not be surprised at all to see that kind of technology in very lightweight versions," he added.
McFarlane said two other technologies, the anamorphic lens – a lens that reduces a larger image into a smaller space – combined with high-definition television (HDTV), may be used to provide wide-area viewing of a trading floor. This would help bridge global boundaries, making it easier for head traders to see the action on overseas trading floors.
IPC and BT, meanwhile, have begun integrating voice, video and data technologies into their turrets. The popular buzzword for this is CTI, or computer telephony integration.
BT, for example, introduced its first voice and data-integration applications two years ago. This enables a trader, whose turret is connected to a desktop PC, to view a customer's portfolio when the customer calls the trader. The trader, in turn, can see what the client is following, and instantly assess risk tolerance and credit information.
"This allows head traders to better monitor activity on the trading floor, and make more informed decisions to better serve their clients," said BT's marketing manager Elizabeth Edwards.
Partnering with a major intercom provider, BT will soon market a video intercom that will plug into BT's pV405I turret. This enables traders on the floor to hear each other's voices as well as see each other on the intercom video unit.
Although Edwards said there is no pent-up demand for video products on the desk, she contended that once traders see the technology in use, they'll wonder how they ever lived without it.
"I think it'll be one of these things that have a slow smolder in the beginning but catch on like wildfire," she added.
IPC's Wayt concurred. Still, expecting demand to pick up in the future, IPC has been working on an application that will provide things like streaming video clips of analyst and news briefings, which some traders may want to access on-the-fly.
Separately, BT recently rolled out a service to Barclay's Bank of London that plugs some of its high net-worth investors directly into the bank's trading floor over a secure Internet connection, providing a 15-second window to accept a given price.
"They can go in, check their portfolio in real time, see what's hot, and then click a button that tells the trader to call them back," Edwards explained. "The call is instantly routed to the turret, and when the trader answers the call, the display screen shows what the customer is viewing." BT is preparing to mass market the application.
BT has an estimated 23-percent share of the U.S. market for trading turrets, and a 50- percent share of the U.K. market. BT customers include financial-services giants CitiGroup, Merrill Lynch & Co, Barclays Bank of London and Credit Suisse First Boston. BT's pV405I trading turret is priced in the range $6,000 to $12,000 a position. The price varies depending upon volume and features selected for the system.
Last year, IPC bought Reuters Voice Systems, a unit of Reuters Group in London, bringing IPC's share of the turret market in the U.S. to an estimated 70 percent, and 50 percent in the U.K. Globally, IPC has an estimated 55-percent market share. In June, IPC announced the acquisition of turret maker VBand Corporation, which IPC says will bring its global market share closer to 60 percent.
IPC customers include top financial- services providers Salomon Smith Barney, Chase Manhattan Bank, PaineWebber and Morgan Stanley Dean Witter & Co. Its flagship MX SlimLine trading turret is priced in the range $6,000 to $10,000 a position. The price varies, however, depending on volume and features selected for the unit, such as the number of voice channels per speaker.
For its part, IPC sells not only trading turrets through its IPC Trading Systems division, but the underlying networking capacity to supply those turrets through its soon-to-go-public IXnet subsidiary.
"What do traders want to see that they can't see today?" IPC's Wayt asked. "They want to see which guys are on which lines, and any calls they have holding so the head trader can say, John, what are you doing? You've been talking to this guy for ten minutes and he's a deadbeat! Meanwhile, this customer who's spent $100 million a year with us has been holding for three minutes!'"
Released last September, IPC's Alliance MX turret features this kind of voice and data-integrated capability.
IPC's CTI application, now in development, will allow traders to view video clips, add and search text, and hold a voice conversation simultaneously over the Internet. While the AllianceMX turret already provides a voice recorder with an interface to a trader's PC, IPC is testing a handset device that will enable a trader to push a button on the handset to activate the voice recorder in mid-call.
IPC is experimenting with voice recognition on the turret that will allow a trader to speak a trade on the telephone, enabling the ticket to be automatically filled. "This will make it unnecessary to re-key the same deal in a separate system," said Harry Bergen, IPC vice president of technology solutions.
"These technologies will help make sure both sides agree on the trade in real time," he added. "If there's any question down the line, you can double-check an order by popping the ticket back up on the screen. The voice record is already affixed to the ticket."
Trading Desk Technologies – A Timeline
Telephone Turret Market: The Gizmos
Product: Flat-Panel Display Screens
Release information: Now available; further development ongoing.
P: Integrated data and voice within the turret, providing such features as
customer profiles on the desktop PC tied to incoming caller
R: Both BT and IPC now have this capability available.
P: Video Intercom
R: Product released June 15 by BT.
P: Customer connection to trader via Internet.
R: Released June 15.
P: HDTV with Anamorphic Lenses
R: Available now, but equipment cost plus price of necessary transmission
bandwidth will keep it impractical for remote trading-room viewing for at
least two to three years.
P: Speech Recognition on trading desks
R: Now available for trade entry functions; very limited vocabulary;
will be widely available for general voice-command input when
background noise interference problem is solved, probably in two to
five years.
P: Voice Language Translation
R: Speaker dependent systems may be available in as little as two years;
speaker-independent systems should be available within five years,
assuming background noise problem is also solved.
P: "Heads-up Display" or "Video Headset" for market-data technology
R: Now available, but still cumbersome for all day use and very expensive
for military-quality display; may be lighter weight, more affordable and
find acceptance within five years.
P: Retinal and Iris Scanning
R: Now used for identification of ATM users and other security functions;
may be combined with "heads-up display" within ten years to
automatically change views as trader looks toward different parts of
market-information displays.
P: CTI showing video clips
R: IPC developing.
P: Handset button recorder activation
R: IPC developing.
P: Voice recognition to automatically fill out trade ticket
R: IPC developing.
P: Streaming video clips
R: IPC developing.
Source: BT North America and IPC
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