Royalblue/Fidessa (London) is launching Fidessa BlueBox, an algorithmic trading system for sell-side firms seeking to offer their own automated trading strategies. The product, which is slated for release in the third quarter, is integrated into the Fidessa sell-side order management system (OMS).
According to Martin Hakker, EVP of marketing, Fidessa BlueBox is a cost-effective solution that provides control and flexibility when interacting with algorithms. Rather than rely on algorithms developed by bulge-bracket firms, which brokers may regard as competitors, Fidessa BlueBox allows brokers to internally host algorithms provided within the OMS, or build proprietary algorithms, Hakker adds.
BlueBox is divided into two sections, explains Kristin Fendelander, Fidessa's VP of marketing. The strategy section consists of a set of industry standard models - such as VWAP, implementation shortfall, and arrival price - to assist traders in meeting benchmarks. The second section, BlueBox Framework, is a development environment for the design of algorithmic trading models.
"We took a step back to understand the needs of an algorithmic developer to give them quicker time to market," adds Matt Rowley, Fidessa's product manager for algorithmic trading. Additionally, BlueBox provides more transparency than other algorithms, he says. "With the external third-party algorithms, the rules are locked down," Rowley asserts. "[Brokers] don't know what the rules are."
Hakker notes that many OMS vendors charge connectivity fees or per-share transaction fees on top of brokers' commissions to provide access to brokers' algorithms. He says Fidessa, however, will charge a flat monthly fee for BlueBox, though he declines to disclose the amount.
Sang Lee, managing partner at Aite Group, sees the move into algorithms as an attempt by Fidessa to leverage its existing OMS capabilities. "The real sales pitch for Fidessa is they're able to provide everything from order management to execution management to [direct market access]," he observes. "Algorithmic trading is a piece they were missing."
However, Lee notes, algorithmic trading platforms already are available from execution platforms, such as Portware and FlexTrade, that have connections to all the algorithms from the bulge-bracket firms. "They [also] have their own prebuilt algorithms, plus the clients could build their algorithms on their platform," he says. "I'm not sure how much you get switching over to a Fidessa."
While acknowledging that many firms have entered the algorithmic space recently, Hakker says BlueBox's flexibility offers an advantage over other solutions. Since BlueBox Framework is fully integrated into the OMS, for example, developers can leverage market data, tick data or the compliance rules already in the Fidessa OMS, he explains. "[Brokers] don't have to spend millions of dollars building an infrastructure," Hakker says.