Leaping into the direct-access trading business, HyperFeed Technolgies announced Wednesday that it has acquired Focus Technology Group, a Chicago-based provider of smart-order routing technology.
HyperFeed has been in the managed-service business through its HPTX ticker plant for providing direct-exchange feeds. This acquisition moves the company out of the model for infrastructure and IT onto the front-office trading desk, says Paul Pluschkell, president and chief executive officer of Chicago-based HyperFeed.
"It really reinvents HyperFeed into a direct-access provider," says Pluschkell. Pluschkell said the smart-order routing system would be broker/neutral since HyperFeed is a software company, not a broker, and does not have its own order book. "Since Lava's acquisition by Citigroup they're no longer agnostic," says Pluschkell. "We're independent without requiring an order book or a certain place to clear," he adds. He says the deal positions the company for Reg NMS compliance because the smart-order router shows not just top-of-book, but also the depth-of-book from equity exchanges and electronic communications networks.
The Focus smart-order router works differently than others on the market and will help firms with SEC rules for achieving best execution, contends Pluschkell. Pluschkell says the Focus smart-order router scans the markets in real time, figures out which markets have the best price for each stock and relative price points, and then breaks up the order before routing the pieces to multiple destinations. "We're offering true smart-order routing," says Pluschkell, who contends that "There's a lot of static routing going on and just dumping entire orders on the large ECNs."
Terms of the all-cash deal were not disclosed, but Pluschkell said the deal included royalty payments, noting the company would file an 8-K with regulators. HyperFeed acquired the personnel along with the technology but declined to say how many employees are in the company. Focus executives will be put in charge of HyperFeed's new transaction strategy.
Focus was founded three year ago by its President, John Margolis, who is a former futures trader on the Chicago Mercantile Exchange, former index-arbitrage trader at Spear Leeds & Kellogg and one of the original members of Teranova that built the Archipelago platform.
In terms of diversifying its business, the deal gives HyperFeed two paths -- the ticker plant with the low-latency data solutions and the smart-order routing. "We're not a one-trick pony any longer," beams the CEO.
PHLX Converts to Hybrid Electronic Market
The Philadelphia Stock Exchange (PHLX) has completed the transition from a floor-based market to an electronic hybrid market, the exchange announced on Wednesday. PHLX contends it's the first floor-based exchange to trade all of its options and sectors indexes electronically using PHLX LX, its electronic-trading platform.
"With the completion of the floor-wide rollout of PHLX XL, our customers are seeing much faster executions with deeper and liquid markets across all options products," states William Morgan, executive vice president and chief information officer at PHLX. PHLX is a proprietary electronic-options trading systems combining "the best attributes of electronic and floor-based trading," the exchange says in its release.
The electronic system now enables market makers to deliver streaming quotes electronically on or off the floor. It also enables PHLX to improve electronic access for customers, broker/dealers and market makers while leveraging the advantages of a floor-based environment.
Pulse Unveils FlexDMA Service to Buy-Side Customers
Pulse Trading has started rolling out FlexDMA, a service bureau-based connection to multiple points of execution, offered by FlexTrade Systems to its buy-side customers.
Pulse is an institutional agency brokerage firm and has been a FlexTrader client since 2002. Its clients include large pension plans, money managers and hedge funds. "FlexDMA permits us to provide institutional customers with technology equal to or superior to that found at large Wall Street firms," states Pulse Trading Chairman, J. Mark Enriquez in the release. "Through a sponsorship with Pulse, institutions are confident that no information leakage or proprietary trading will adversely affect their order flow," further states Enriquez.
Introduced in 2004, FlexDMA is a hosted solution consisting of direct-market-access servers that enable sell-side firms to offer a menu of electronic-trading services to their buy-side clients. Buy-side clients of Pulse submit their order market, limit or smart-routed orders directly to the market center or electronic communications network (ECN) of their choice via proprietary connection to the FlexDMA hosted site. Apart from DMA, a buy-side trader can continue sending algorithmic, DMA or working orders/lists to a sales trader at Pulse via the Financial Information Exchange (FIX) protocol.
In addition to the service-bureau-hosted DMA, other FlexDMA services include: fully customized strategies, integrated over-the-counter and listed smart orders, flexible internal and external order routing and real-time risk management, integrated single-stock and program trading, and comprehensive pre-and post-trade cost analysis.
Markit Expands Dividends Forecasting Service for Traders
Markit Dividends and Index Management, which is part of Markit Group Limited, has increased its service forecasting U.S. dividends to include the Standard & Poor's (S&P) 400 in addition to the S&P 500 stocks. It plans to release dividends for the S&P 600 index on May 1.
The expanded coverage comes in response to customer demand. These forecasts are a critical input for equity derivative models, indexation, income funds and derivative margining systems, the company says.
Markit uses fundamental analysis of each U.S. stock to forecast the dividends on 4,500 of the worlds leading equities, and back testing reveals an accuracy of over 85 percent in forecasting the precise dividend amounts and ex-dividend dates. In addition, Markit's Index Management Service consolidates, validates and updates the constituents of over 8,000 global equity indices and exchange-traded funds (ETFs) on a daily basis. Market is the only provider of both dividend forecasts and index data through a single Xtensible Markup Language (XML) feed, the company contends.
"The Markit Dividend service helps our traders with quality information and enables us to spend more time focusing on transaction-critical dividends," states Joe Fernley, global head of equity-linked technology at Merrill Lynch in the release.
Markit's customer base includes investment banks such as Credit Suisse First Boston, Citigroup, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch; specialist derivatives traders and market makers such as Timber Hill; asset managers such as Barclays Global Investors; and derivatives exchanges such as Euronext.Liffe.