REDI Global Technologies, the recent financial technology spinoff from Goldman Sachs, struck a partnership Citadel Technology to provide an integrated order execution management system or OEMS, to the buy side community.
Citing demand from the buy side for an integrated OEMS, which many have dubbed the “Holy Grail,” REDI's CEO Rishi Nangalia said the Citadel-REDI solution is different from what other vendors have talked about. It will combine the order management and position management functionality from Citadel with the execution management system (EMS) of Redi to provide an end-to-end solution for asset managers.
While several vendors claim to offer the integrated OEMS, traders are still sitting in front of multiple EMS screens and keyboards., noted REDI officials. “No one is interested in having four products on three desks,” said Adam Striffler, REDI’s Head of Sales. The move is toward consolidation. It’s a single platform to the greatest extent possible,” said Striffler.
The deal is a first step taken by REDI, since completing its spinoff from Goldman Sachs in July when the Wall Street firm sold a minority interest to a consortium of five investors, including BofA Merrill Lynch, Barclays, BNP Paribas, Citadel Securities and private equity firm Lightyear Capital.
[For more on Goldman's REDI Spin-Off Signals EMS Market Shift, see Ivy Schmerken's related story.]
At a press briefing yesterday, REDI’s CEO Rishi Nangalia said the broker-neutral EMS provider is looking to expand beyond the EMS into providing solutions for the entire lifecycle of a trade.
“We are taking the view that if we build an open collaborative platform, we get the best-of-breed technology from various other companies together rather than trying to say everything has to be built here,” said the REDI’s CEO.
Citadel Technology provides a flexible OMS , which allows for seamless connection to REDI’s EMS., according to the release. Citadel Technology is the wholly owned independently operated affiliate of Citadel LLC, the Chicago-based hedge fund manager. Citadel Securities is among the five investors in REDI Global Holdings.
“This partnership represents the future in asset management and we are delighted to offer clients the next generation in portfolio management, order management, execution management and risk management,” commented Tom Miglis, chief information officer at Citadel who is a REDI board member.
The combined product will offer: seamless, intuitive workflow across portfolio managers, traders and middle-office staff; complete multi-broker execution and multi-prime broker clearing; real time P&L and risk management across listed and OTC asset classes; and integrated pre-, real-time,, and post-trade compliance checks.
While REDI could have taken the angle of building its own OMS or buying one, Nangalia said he was impressed by the Citadel platform. “They had developed a really robust asset management platform,” said Nangalia, CEO of REDI. The two firms have already created a proof of concept (POC) to integrate the two platforms, said Nangalia, adding that this POC has been validated by bunch of prime brokers, buy side clients and brokers.
A key aspect is that the OEMS will be a hosted via the cloud and the client will not know the difference between an OMS window and an EMS window, he said. “REDI is a collection of windows that make a workspace. The Citadel OEMS will reside and be embedded in that workspace and all the windows communicate with each other,” said Nangalia. He described the product as a series of entitlements packaged with prescribed workflows.
Also, the partnership will enable Citadel to leverage REDI to offer OMS functionality to REDI’s client base of 800 firms that use its multi-broker, multi-asset class EMS. The early adopters are likely to be hedge funds because it’s easier for them to switch systems, that will see the value in the workflow efficiency, but asset managers and hedge funds are both candidates for the system. In addition, registered investment advisers (RIAs) and family offices that resemble mini-hedge funds and may use systems from retail brokers are potential targets. “I do think the Citadel solution and the combination with REDI is fairly flexible and it’s modular in design so it can scale from a very small hedge fund even up to the long –only asset manager,” said Joshua Schubkegel, REDI’s chief technology officer.
However, the agreement with Citadel is not exclusive, which means that REDI can also collaborate with other OMS that a client wants. “We’ll collaborate with any OMS, [and] Citadel is open to collaborate with any other vendor of sorts, but we hope that this partnership is a little bit special to the client,” says Nangalia. “The notion of guarded walls and exclusive relationships is a bit old school,” he added.
Now that REDI is no longer under Goldman’s umbrella or residing within the broker’s electronic trading unit, the firm is keen to leverage its position to build an open platform, he said. Redi’s vision is one of collaborating with the sell side to distribute its products while helping the buy side and third party application providers as well. “We just don’t want to become an EMS. We are a trading platform but we want to metaphorically become the platform for the industry, not just the sell side where we came from, but the buy side, and also vendors and the start up community,” said Nangalia.
[To hear from keynote speaker William Murphy, Chief Technology Officer, Head of Blackstone Innovations and Infrastructure, register for Interop here. Murphys presenation, “Is IT Irrelevant?” will take place during Interop from September 30 through October 4 in NYC.]