By way of introduction, my role at TT has involved me in a number of strategic initiatives including proximity trading, synthetic orders, Financial Information eXchange (FIX) protocol and application programming interfaces (APIs).
Most recently I’ve been holding discussions with a variety of firms to further enhance the capabilities of our system for buy-side traders and portfolio managers. In this role, I’ve had the pleasure of speaking with some key players in the buy-side community.
Of course, the term “buy side” itself refers to a fairly wide swath of business models, ranging from asset managers to hedge funds. But despite the breadth of the buy side as a whole, a growing number of buy-side users is demanding the option of a high-touch capability in a world otherwise driven toward low-latency, low-touch trading.
All the World’s a Stage
Staged Orders in X_TRADER®
Order staging, which involves the creation of staged or “care” orders, is in some ways an idea that’s as old as agency trading itself. Although they weren’t called care orders at first, care orders started as a voice call to a sell-side trader over telephones and squawk boxes. As technology marched forward, the vehicles for submitting care orders evolved to include faxes, followed by emails and instant messages.
But the driver behind staged orders is timeless and simple: I need a position, and you know how to achieve it better than I do.
The Reports are Greatly Exaggerated
It’s refreshing to see what I consider a sort of renaissance in high-touch trading. Despite the prognostications of some concerning the death of the sell side through commoditization, there is real value offered by experienced sales traders that remains as viable today as it did years ago. The emergence of sophisticated execution management system (EMS) and order management system (OMS) solutions for the buy side cannot fully replace the depth of market experience offered by brokers and futures commission merchants (FCMs). And as more buy-side firms acquire sophisticated, low-latency platforms such as TT’s, they nonetheless ask about the ability to split some of their orders away from the microsecond DMA-driven automation paradigm into the hands of their trusted sell-side specialists.
TT released order staging for general availability in July, and since then a number of leading brokers and FCMs are preparing, or have already made available, order staging of listed derivatives products to their users through the TT platform.
Order staging through TT helps ensure the order will not be overfilled, executed in the wrong direction or against the wrong contract. These controls, along with TT’s robust risk management, activity logging and user authentication capabilities, provide a superior alternative to voice, fax and email care orders, which can’t provide the same protection. And buy-side users such as portfolio managers can submit care orders to their designated execution traders from either an X_TRADER screen or directly from a FIX-enabled OMS.
The marriage of external systems with TT’s order-staging functionality offers best-of-breed order handling and execution to a wide range of buy-side firms. This path involves leveraging FIX to integrate business capabilities for the end user. For example, a leading provider of trade accounting and position management software for alternative investment managers has integrated its systems with TT’s platform using TT’s latest FIX Adapter. Now its end users can direct certain orders to internal or sell-side execution specialists for optimal execution through TT’s order-staging functionality while leveraging the system’s inherent capabilities, including trade reconciliation and portfolio modeling.
A major bank has extended its global OMS to support TT order staging, enabling designated orders to be routed to its care order desk for high-touch order handling and oversight.
Trust a Leader
When an execution trader receives a staged order on TT, that trader knows the speed, reliability and functionality of the TT system are there to support the most effective execution of his client’s care order. Whether that order was originated from a third-party OMS, internal bank system or buy-side X_TRADER screen, users on both the buy- and sell-sides are leveraging the power and capabilities of the world’s leading derivatives trading system.
Thanks for reading my debut blog post for TT! In future posts I will share some detailed commentaries and observations concerning buy-side trading, FIX, OMS integration and applications development. Until then, the blogger torch here at Trade Talk will be passed among several of my colleagues in Product Management. I’ll be back here with you soon.