FlexTrade Seeks To Be First With Block Forex System

18-20_112006.qxd 11/16/06 3:09 PM Page 20
20 November 20, 2006
Securities Industry News
TRADING
FlexTrade Seeks to Be First With Block Forex System
BY ALEXA JAWORSKI
and the sell side. Correlating that to the
[proprietary] trading shops. The real chal-
ate a next-generation solution for broker-
FlexTrade Systems, a leader in multi- FX space, once again we see that there lenge for FlexTrade will be to attract the neutral algorithmic trading. That integra-
asset algorithmic execution manage-
really is no place where large blocks of
necessary initial liquidity to make this suc-
tion process “has come along well, and in
ment systems (EMS), is preparing to
FX can be traded anonymously without
cessful. A painful lesson in the execution
the coming year you should see good re-
launch what it claims to be the first block-
market leakage or impacting the price in
business is that even if you build it, it is
sults from it,” said Kedia.
order foreign exchange trading platform
the market.”
not guaranteed that they will come.”
that provides level-playing-field access to
New York-based Portware, an EMS
STP Initiative
both buy- and sell-side institutions in-
competitor often pitted against Flex-
On Oct. 11, FlexTrade and Traiana Har-
cluding hedge funds, commodity trading
Trade, said that its Portware FX system
mony, a New York-based post-trade pro-
advisers, money managers and banks.
acts as an aggregation platform provid-
cessing vendor serving the forex industry,
Currently in a beta test, expected to go
ing forex quotes from multiple dealers
jointly announced an improvement in
live before year-end and dubbed MilanFX,
and venues. “The addition of an FX
straight-through processing (STP) for FX
the platform will allow users to execute
crossing network seems to put FlexTrade
prime brokerage. One hedge fund is al-
large FX trades anonymously, prevent-
in direct competition with its partners,”
ready taking advantage of the connectiv-
ing market impact or information leak-
said a Portware official.
ity between its algorithmic systems and
age with a sizable community of traders
FlexTrade, a ten-year-old company that
the Traiana Harmony Network, which
without concerns about gaming the mar-
calls itself a global leader in broker-neu-
“complements our platform to ... trade
ket or engaging in predatory order flows,
tral algorithmic trading platforms and
with multiple prime brokers in a real-time
said the Great Neck, N.Y. company.
rules-based order management and exe-
settlement and STP fashion,” said Kedia.
“Customers on the FX side have often
cution systems for equities, foreign ex-
“We are excited to work with FlexTrade
had a need to move big blocks that cannot
Vijay Kedia
change and listed derivatives, has an-
to assist our sell-side clients with further
be done algorithmically,” said FlexTrade
nounced several strategic moves over the
automation of their prime brokerage op-
president and CEO Vijay Kedia, noting
Kedia said he knows of no other plat-
last year. Kedia said the company has made
erations and to enable new trading stan-
that the product, echoing a similar evolu-
form where users trade algorithmically
particular strides in multi-asset-class trad-
dards in the market,” added Illit Geller-
tion in equities trading, arose out of de-
with 25 different banks and streaming
ing. “There are many platforms that claim
Gurfinkel, VP of business development at
mand from customers. “They need access
prices with opportunity for significant price
to be multi-asset, but what is unique in our
Traiana.
to an exclusive pool of liquidity and play-
improvement.
case is that large firms use our product
In June, FlexTrade signed a joint de-
ers who contribute such blocks, and this
purely for FX, options, futures and equities
velopment and distribution agreement
technology gives them just that.”
Algorithmic Race
trading,” he said. “This means that for all
with DST International, a Boston-based
Amid a flurry of trading-platform and
Sang Lee, co-founder and managing part-
four of these asset classes, [FlexTrade] has
unit of DST Systems that specializes in
technological development in the $2 tril-
ner of Boston-based research firm Aite
proven itself.”
investment management systems. The
lion-plus daily foreign exchange market,
Group, said that FlexTrade is one of many
FlexTrade is currently integrating its
agreement allows for an integrated port-
Kedia said, “We realized there was a void
organizations exploring block trading in
systems with FIT-Traderforce, Europe’s
folio modeling, order initiation and al-
in the market for a block FX trading sys-
foreign exchange, and it may take credit
leading provider of financial information
gorithmic execution management plat-
tem that could create a level field between
for having “the first platform to be offi-
platforms, in which FlexTrade acquired a
form for the buy side. The solution, ad-
the buy side and sell side. Looking back,
cially released.” Lee added: “Facilitating
72 percent stake last November. FlexTrade
dressing the growing demand for broker-
when we came up with our first algorith-
block trading with minimum market im-
said it would integrate its expertise in
neutrality in trading options, has already
mic broker-neutral equities platform, we
pact would certainly be attractive to mar-
multi-asset algorithmic trading with
been implemented at a top-ten global in-
created a level field between the buy side
ket participants, especially hedge funds and
Traderforce’s thin-client technology to cre-
vestment bank. ■
nancial institutions, the Sarbanes-Oxley
of reference data services for consultancy
Data Survey — Continued from page 18
Act is front and center, cited by 63 percent
Capco, said that his firm sees increased de-
since many of their processes are manual-
Outsourcing also does not appear to be
as the driving force of automation.
mand from both U.S. and European firms
ly based, they need to rely more heavily
a popular strategy in Western Europe, with
for its managed reference data service,
on third-party packages,” said Martin
16 percent saying they were going to buy
MiFID Factor
which now has over 30 clients using li-
Buchberger, director of marketing for AIM
a data management solution and extend it
For the first time in the three years of AIM
censed and full-outsourcing capabilities.
Software. “They are in a good position to
to their own needs. Eight percent in that
surveys, Europe’s Markets in Financial In-
Just last week, the firm announced an
advance quickly because they don’t have
region said they intended to outsource the
struments Directive (MiFID) hit the radar
agreement with AXA Investment Man-
to work with legacy systems.”
development of data processing software,
screen as a regulatory initiative motivat-
agers to outsource the management of its
and 2 percent want to outsource the pro-
ing automation of data management. It
counterparty data; in March, Capco signed
Staying In-House
cessing of financial data itself.
was cited by 9 percent of firms worldwide
a similar deal with ING Group for refer-
Among U.S. financial institutions, 22 per-
Among the reasons given for data man-
and 13 percent in Europe.
ence and market data.
cent said they would buy an off-the-shelf
agement automation, 66 percent of all re-
U.S. and Western European companies
Dizdarevic predicted that MiFID
solution while 26 percent preferred home-
spondents cited Basel II as a driving force,
said they valued the automation of price
would prompt a greater interest in out-
grown technology. Only 8 percent will
up from 40 percent in 2005.
data above other functions of reference
sourcing as buy-side firms and smaller
outsource the development of reference
Seventy-five percent of Western Euro-
data management, while in Central and
brokerages try to off-load compliance to
data management software, and 5 percent
pean, Central American and South Amer-
South America the greatest emphasis was
larger investment banks. MiFID, taking
will outsource the processing of reference
ican firms saw Basel II as the main driver
on reference data management. Among all
effect next November, requires fund man-
data. Thirty percent said they had no
for automation of reference data manage-
the regions, the Commonwealth of Inde-
agers, broker-dealers and banks to prove
plans to automate their reference data
ment. That response compared with 69
pendent States—the former Soviet Bloc
they have met the conditions for “best ex-
management whatsoever, which AIM
percent in the Middle East and Africa and
countries—showed the greatest interest in
ecution” on a transaction, defined as the
Software attributed to their advanced state
57 percent in Asia-Pacific. In the U.S.,
the automation of reference data.
total cost of the transaction, not only the
of preparedness.
where Basel II applies only to the largest fi-
Predrag Dizdarevic, partner and EVP
best price. ■