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FlexTrader Snags Wins at Jefferies and Midwest Hedge Fund

Jefferies & Co. expands its relationship with FlexTrade.

What do a New York City-based institutional trading firm and a Midwestern hedge fund have in common? Well, for one thing, they both use an equity trade order management system (OMS) supplied by Great Neck, NY-based FlexTrade Systems. Moreover, both firms want to provide access to multiple execution destinations, and both have customized FlexTrade's FlexTrader to meet the needs of their individual traders.

Jefferies & Co., the institutional trading firm, recently expanded its relationship with FlexTrade. In the past, Jefferies used FlexTrader to receive trades from trading counterparties. But in the fourth quarter of last year, the firm started to use the system to execute trades on its New York City-based program trading desk. "The part we recently went live with was actually using FlexTrader on our desk to help execute the trades-to increase our volume capacity," says Rich Bartels, senior vice president in charge of trading technology/program trading at Jefferies.

Bartels says that Jefferies has been able to leverage FlexTrader's open architecture to handle the program trading desk's burgeoning volume. FlexTrade's OMS provides leverage, in part, by giving traders the power to customize the system. "Originally, FlexTrader was more focused on a proprietary trading desk type of environment. But we had multiple accounts, multiple clients and multiple sub-accounts, and needed to be able to access an agency desk, as well as a principal desk. So to handle the intricacies of things, we did a fair amount of customizing of the FlexTrader OMS to suit our needs here on the desk," says Bartels. "We specifically wanted to have FlexTrader to handle a very large Russell rebalancing type of trade, where you handle up to 3,000 names and fairly significant numbers of buys and sells simultaneously. And that's where we were quite confident they would help us."

Similarly, the Midwestern hedge fund that has gone live with FlexTrader was won over, in part, by the system's flexibility. Speaking on the condition of anonymity, a source at the hedge fund says the firm has installed FlexTrade's OMS in support of its traditional equity traders and basket traders. Those traders, he says, are impressed with the openness of the system's design. "One of the attractive features of FlexTrader is that it's got a run/time interpreter that will interpret a rules set that you can input into the system. It's a shell and you supply the engine. So you supply the rule engine that you want to route to," says the source.

What's more, in addition to FlexTrader's flexibility, speed and analytics, the source says that the hedge fund's traders are impressed with the system's order-routing capabilities. Through FlexTrader, he says, traders electronically send orders to a bushel of Nasdaq market makers, the New York Stock Exchange's SuperDOT (via a NYSE member firm) and four ECNS-Instinet, Archipelago, Island and Redibook. "We trade so much that he we need to have redundancy. And we need to find the best fit for the style of trading we're doing," the source says. "What this says about FlexTrade s that its FIX engine is phenomenally generic ... It can interface to multiple counterparties."

Likewise, Jefferies' Bartels is pleased with the multitude of execution destinations FlexTrader connects to. Through FlexTrader, he says, Jefferies' program traders now send trades to "all of the ECNs," multiple Nasdaq market makers and the American Stock Exchange, as well as to a handful of regional equity markets. "We're trying to provide the lowest transaction cost per trade for our clients, depending on their benchmark, and so you need to have full access to liquidity," Bartels says. "If you're limited in terms of your access to liquidity, your limited in terms of you're ability to reduce transaction cost impact."

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