Demand for International Trading Booms
The demand for trading solutions that specifically facilitate international trading will continue to grow, according to Peter Delano, a senior analyst with TowerGroup. Delano points to a recent TowerGroup study that reports that global spending on order management systems (OMS) by buy-side firms will increase from $450 million in 2006 to $750 million by 2010 - a 66 percent increase.
Firms are "trying to take advantage of local market conditions as opposed to trading ADRs [American Depositary Receipts], because there is more opportunity," Delano explains. "Plus, because investors are ultimately becoming more sophisticated, we are seeing both asset and hedge fund managers with broader mandates to seek alpha and get results. And there is plenty of evidence on the floor of the SIA show that solutions providers are gearing up for this expected boost in spending.
New York-based Tradeware Global (booth 1418) is showing off its GlobalX system, which was launched in the third quarter of 2005. GlobalX is targeted toward sell-side firms that are looking to execute trades abroad on behalf of their institutional clients.
Tradeware chief executive officer Howard Schwartz says this is "really the right product at the right time." With both buy-side and sell-side firms looking to go abroad and diversify away from U.S. markets, and the demand to go into more emerging or developing markets, we have seen a great deal of interest."
Another company looking to capitalize on the increased demand for both algorithmic trading and overseas investment is London-based Royalblue Fidessa (booth 4106). Fidessa's Execution Management Workstation is a software program that sits on the buy side's desk. It routes order flow based upon the buy-side firm's preference and/or relationships with some 140 executing brokers on 67 exchanges worldwide, according to the firm. The software gives buy-side firms access to Level I and Level II data, and allows firms to route orders to brokers with which they already have relationships, or to other local brokers in individual markets. Likely buyers of the product are hedge funds, proprietary trading desks and mutual funds, according to Martin Hakker, Fidessa's EVP of marketing.
The advantage of the software, Hakker contends, is that, "It prevents buy-side firms from having to make multiple phone calls - if that is the way they currently do business - in order to route order flow. It also prevents the firms from having to download multiple software programs from each and every individual executing broker the firm uses.