While small- to mid-size clearing firms may not have large IT departments to develop technology from scratch, Legent Clearing teamed up with New York-based Automated Financial Systems Corporation (AFS). "We don't have a 100-person IT department. We have to partner up, and we're very selective who we choose," says William Zelasko, Legent's executive vice president and chief operating officer.
In July, Legent upgraded the broker Web site it offers to correspondents and the client Web site it offers to retail clients. "Through partnership, we have developed a nice solution for the retail client to go in and trade, put in positions on a tax-lot basis, request electronic statements and confirms and tax reports," says Zelasko.
AFS also interfaces with Beta Systems, Legent's back-office provider. "That was critical in our decision, because the data from Beta is what we abide by," says Zelasko.
There was a lot of customization that Legent required, which AFS was able to support, says the COO. "A lot of the customization had to do with business rules that Legent wanted to implement," explains Andy Abbinanti, account manager with AFS. "We have very intricate database-driven rule systems that route orders for administrative purposes," he explains.
For example, "It may be a warning based on a limit-order price being 20 percent away from the current market," he notes. AFS can break down rules per correspondent, giving them more latitude for trades, says Abbinanti.