Markit is developing a new Trader Dashboard for the buy side and has hired Tom Conigliaro, a Wall Street veteran, as managing director to head up the Trading Services Group.
Conigliaro, who brings 25 years of experience at Merrill Lynch and Goldman Sachs, has developed buy-side products previously. In 2003 he was recruited by Goldman to build a commission management business which led to the launch of an independent research business, known as Hudson Street, which helped the buy side obtain third-party research and vendor services during a time in the marketplace when there was a push by the SEC to offer increased transparency. Hudson Street's research companies included Wall Street On Demand and Quantitative Services Group (QSG), which were acquired by Markit in 2011 and 2012, respectively. In 2011, Conigliaro joined Marlin, a boutique M&A investment banks, but kept in contact with Markit.
Conigliaro joined Markit three weeks ago and is now leading the Trading Services business in the development of a new buy side Trader Dashboard. The dashboard will integrate many of Markit’s capabilities including TCA, commission management tools, broker voting service and fundamental signals from its Factors suite. The goal is to deliver those analytics and metrics on a streaming, intraday basis. This is aimed at providing the buy side with triggers and data inputs to inform their trading strategies and improve on execution performance.
The trader dashboard is designed to be a tool that sits in the background of the buy-side desktop and is mostly an alert-driven tool. “We could have TCA running through this desktop in the background and alerts would appear on screen when certain transactions hit a certain limit, or liquidity estimates have been breached for example,” illustrated Conigliaro. This would inform or empower the trader to adjust strategy or method of execution in that particular security, he said. “We’re finding that if we could utilize this behind-the-scenes stealth platform, it would enable the buy side to manage their daily trading flows on an exception basis, thus freeing up their time for transactions that require more attention,” said Conigliaro, adding this would be the trades going awry.
In terms of trading, the buy-side needs help managing information that’s new,” he said. The firm’s fundamental Factors product could provide that kind of alerting mechanism. Other data sets could provide a unique opportunity to alert the client, and “TCA would benefit the client using this alerting technology,” he said.
Today, Markit’s TCA has been more of a T+1 product. “We analyze the previous day’s transactions and point out the aberrations and where trading strategies can be amended. For many clients that is fine, but there is a whole other set of client who would like to see that kind of analysis done on a more streaming, same-day basis. “As executions are happening,” said Conigliaro, the plan is to “populate the client with data and insights that enable them to switch gears intraday, as opposed to next day.”
As Markit evolves the TCA product into a same-day tool, it is taking a consultative approach by collaborating with core clients who are “outspoken on the issue and who utilize TCA in different ways,” said Conigliaro.
Integrating Other Tools into Trader Dashboard
Next, Markit is in the process of integrating its Commission Manager and broker voting service modules “so that one tool can inform the other,” said Conigliaro. Virtual aggregation technology is deployed in Commission Manager so that buy side firms can see all of their client commission arrangements (CCAs) and commission sharing agreements (CSAs) across all their brokers. “Rather than having to log into 12 to 15 web sites to see their CCA/CSA activity and send payment instructions, for example, Commission Manager provides them with a single CCA/CSA log on,” said Conigliaro in an interview. This week, Markit will sign up its 100th money manager, which already has 30 brokers using the product.
The buy side has a unique ID and can access the Commission Manager web site to see all of their activity across brokers, review balances, and send payment instructions for research providers. There’s also an auto-reconciliation tool that uploads trades from the sell side, and does a comparison against trade files from the buy side, which is a significant time saver. he said. The buy side can use this tool to determine if there is a trade break or to determine whether a trade belongs in or out. Normally trader and client go through this process; now all trades go in and files are meshed so the reconciliation engine manages the process and kicks out the exceptions. “It just saves both sides of the table hours of time and is a real productivity enhancement tool,” he said.
Another module that Markit sells in conjunction with Commission Manager is the broker vote service, which the buy side uses to assess and actually vote on services provided by the sell side including, sales coverage, analyst quality and research coverage. The product enables a manager to collect all of that data and vote on the brokers and produce a scorecard that helps determine how they allocate commissions to brokers, explained Conigliaro. Some firms in the past may have recalled the services provided by the sell side by writing them down on the back of an envelope and later, an Excel spreadsheet. “It’s converting a process that used to happen in a decentralized fashion to a centralized and better organized process for the buy side,” he said.
Markit has another product called Calendar, which is related to Vote, but is geared to the sell side updating all the events or meetings they’ve created for the client. For example, if broker XYZ arranges meetings for the CFO of corporation ABC for buy-side clients in Boston, Calendar captures this event, so the client can see over a given period of time, which meetings they were allocated from brokers. Then, when it comes to vote, they can recall the services that were provided,” said Conigliaro.
Buy side clients can use the information to have better conversations with their brokers about the services they consume, service levels and compensation.