Targeting broker/dealers, asset managers and retail investors, Stockholm, Sweden-based OM Technology has begun a rollout of a suite of Web-based order-routing systems. Dubbed Institutional Order Management (IOM), Light Web Trading (LWT) and Retail Order Management (ROM), the trio of front-end systems will provide OM clients with direct access to a multitude of execution destinations. Perhaps most significantly, IOM--scheduled to be officially launched in two months--will for the first time provide OM's broker/dealer clients with a direct, online link to Instinet Corp.'s electronic communications network (ECN).
Greg Johnston, U.S. general manager of OM's Securities Systems unit, says the trading systems vendor officially made LTW (aimed at small- to mid-level buy-side institutions) and ROM (marketed toward retail investors) available to clients last week. IOM, a high-end product that will be targeted at broker/dealers, will be rolled out by June.
Johnston declines to specify a list of execution destinations each Web-based front-end will be interfaced with, but says that, in addition to Instinet, either one or another of the front ends will provide direct access to "many different market makers," the New York Stock Exchange's DOT system and Jiway--an online European stock exchange co-owned by Morgan Stanley Dean Witter and OM Technology parent OM Group.
While noting that all three order-routing applications will be linked with OM's One World Service Bureau system on the back end, Johnston says that only IOM will provide users with electronic Web-based connectivity to Instinet. Via a Windows-based front end driven by its service bureau, Johnston says, OM has, in the past, been able to tap into Instinet.
In fact, clients of Instinet have previously used OM's One World front end to keep track of their positions. But the release of IOM will empower OM clients with the ability to route orders to Instinet's ECN over the Internet for the first time.
Johnston expects IOM to appeal to mid- to large-sized broker/dealers that operate either a centralized sales desk or multiple sales desks spread across remote locations. IOM, he says, may be particularly appealing to broker/dealers that receive large amounts of order flow from institutional clients via the telephone.
LWT, unlike IOM, is being aimed at hedge funds and other small asset managers that are searching for a cost-effective front-end solution for their order-routing needs. Johnston says smaller institutions often can't afford top-of-the-line order-management systems, such as The MacGregor Group's Predator. And LWT will provide those small firms with an order-routing alternative.
Through LWT, Johnston says, small institutions will be able to electronically route orders to their brokers via a customizable front end, instead of sending orders over the telephone. "We'll private label the Web system for our customer, and then they'll have a conduit to their favorite brokers," says Johnston.
Meanwhile, on the retail end, OM hopes to snag individual investors via the release of ROM. Johnston says ROM, like the other front ends, was developed with the help of "strategic partners." The key partner for ROM, he says, is National Discount Brokers, an online brokerage firm that uses OM's retail-oriented order-routing tool.
Johnston says that, in addition to Instinet, OM is currently evaluating whether it should provide direct online access to other ECNs. But for the time being, he says, OM is happy to have an agreement with the "leading" equity trade-matching system.
By Robert Sales