The Chicago Stock Exchange is going live with eight Financial Information Exchange (FIX) networks to increase connectivity between floor brokers and the "upstairs" brokers that send them institutional order flow. The networks will hook up to BrokerPlex " the Chicago exchange's order-management system (OMS).
Until this point, floor brokers used BrokerPlex to route orders internally to specialists. But upstairs brokers sending them institutional order flow, had to phone in their orders or use third-party FIX networks and the floor brokers had to key them into the OMS.
"As that side of the business moves to electronic order delivery, we're already there. It's not as if we have one proprietary way. You can reach us through these eight gateway networks," says John Kerin, CHX's chief technology officer.
According to Kerin, CHX is going live with four FIX networks: Belzberg, SunGard/Brass, Royal Blue and OM, and is in testing and about to convert over with another four: Thomson ATR, Tradeware, Arrowhead and NYFIX. "Within a month or two we'll be running at least 10 FIX networks," says Kerin.
BB&T Capital Markets, an upstairs broker located in Richmond, Va., is ready to deliver orders in listed stocks electronically to BrokerPlex via the firm's OM Institutional Order Management system. Chuck Young, senior vice president, institutional trading, says, "We had been doing business on the Chicago exchange the old-fashioned way with verbal communications and taking the reports. Now we can route those orders directly to the broker booth, then as the trades are consummated, the reports automatically flow back to our order management system, offering us real-time reporting back to the client," he says.
BB&T uses OM's OMS on an ASP-basis, to route orders to the New York Stock Exchange's Broker Booth Support System (BBSS), but is adding more execution points to OM, such as Chicago and the Boston Stock Exchange. In addition, it uses OM to connect with buy-side OMSs to capture incoming institutional order flow via FIX.
"The advantage of the BrokerPlex system is that one connection to the CHX allows me to define my routing to any broker on the floor, similar to how the (New York's) BBSS operates," says BB&T's trading executive. The firm is a division of Scott & Stringfellow, a regional brokerage firm, which is a wholly owned subsidiary of BB&T Bank, based in Winston Salem, N.C., the 11th largest financial institution in the United States.
He notes that CHX's BrokerPlex system is modeled after the NYSE's BBSS, but one difference is that BrokerPlex uses the FIX protocol, where as BBSS uses CMS or Common Message Switch.
One of the Chicago floor brokers BB&T will be sending block orders to is Dougal & Associates. "We have our destination code and he sends the orders to us," says Scott Freyn, Dougal's president. Freyn will work the orders on the CHX, but if there is a better price, he will use the Inter-Market Trading System to access another market. "I hit a bid on the NYSE, I might go to Arca, Boston Stock Exchange, it just depends," says Freyn who notes that he can access ITS via BrokerPlex or use a DOT machine."
CSX built BrokerPlex three years ago as a Java-based floor-broker workstation. "It's been tremendously successful. Everyone on the floor utilizes it today," says the CTO, noting there are 70 different terminals on the floor. BrokerPlex started out as a VWAP mechanism for delivering volume-average-weighted-price with time-slicing capabilities, and has been used for order entry and looking up market data as well as providing access to ITS and DOT.
BB&T's Young says the purpose of the electronic connection (to BrokerPlex) is three-fold: first, to provide BB&T's OMS with an audit trail for all of its entries and executions; second, to give an accurate update of an order during the execution phase; and third, to give a complete audit trail from a compliance standpoint after the fact.
"It's our goal that any and all execution points have electronic access, for timeliness of reporting and also for the audit trail analysis of quality of execution and compliance after the fact," Young adds. Eventually, all of BB&T's execution points will be electronic, he says. "Right now, we're probably 90 percent of the way there," he adds. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio