TradingLinx.com has released a new, totally browser-based electronic settlement system that sits in between the front and back offices of financial institutions. In what seems like shots across the bows of Thomson ESG, and less so the GSTPA, TradingLinx is vying to become a major provider of post-trade/pre-settlement messaging and workflow processes for the buy-and sellside communities. Although far from certifying success, TradingLinx has already signed SG Asset Management to use the system, and Justin Lowe, co-CEO, contends that many other European buy-side firms have expressed interest.
As a conduit for managing confirm/affirm notices between buy and sell-side firms, and then between a money manager's front-office trading system and back-office accounting engine, TradingLinx is positioning itself to go head to head with Thomson ESG, the granddaddy of these types of services, and possibly against the GSTPA's own straight-through processing initiatives. Lowe explains that he has, in fact, been in discussions with members of the GSTPA including Tony Kirby, executive director.
"I had a long conversation with Tony Kirby the other day, and his reaction was that we are a solutions provider he would like to include as a part of the GSTPA solution," Lowe says. "The conversation we've initiated with the GSTPA is, how we can work together?"
Pointing a finger at ESG's proprietary applications and networks, Lowe adds, "I think both the GSTPA and TradingLinx are focusing on open systems .... Thomson ESG is not open. If your solution is built around point-to-point solutions, point-to-point dedicated lines, it's not an open platform. That is not the wave of the future." Howard Edelstein, CEO of Thomson ESG, declined to comment for this article.
As a totally online system, there are no applications to be loaded onto a user's desktop. The system is intended to integrate with both buy- and sell-side order management systems, but if the firm chooses, it can use TradingLinx as its primary screen. "In the U.S., firms will say they already have an OMS that they've spent millions of dollars on, so they will want it to be invisible to the user," Lowe explains. "In Europe, they'll say, I'll use TradingLinx as a primary screen, it will be the primary real estate on my trading floor."
Europe, in fact, is where TradingLinx will be focusing much of its efforts because, as Lowe says, it lags behind the U.S. in straight-through processing architectures and processes. "They haven't embraced STP as quickly as Americans, and they conduct a very large proportion of cross-border trades that lead to mistakes," he says.
To facilitate the transfer of data coming in a number of different communication formats, from FIX to ISO15022, the TradingLinx development staff has created a new flavor of XML, titled for now WMXML (walkthrough management XML) that will translate and componentize the messages. "Essentially, it encompasses all the different formats, which will include FIX, because FIX is really good for the pre-trade and the trade part, but it isn't good in the settlement part," Lowe says.
WMXML will also be important to the success of TradingLinx as a means of settling various financial instruments. Since WMXML can break down the messages into objects, those objects can be tailored to the specific needs of the users and different asset classes. "Someone can come to us one day and ask us to use TradingLinx for asset-backed securities," he explains. "We can do that extremely rapidly, within a few weeks."
TradingLinx is currently focusing on licensing the system to the buy side, which then in turn will "convince" its brokers to sign on.