FutureTrade has launched a service bureau based on its direct-market access trading platform, which the Lake Forest, Calif.-based trading technology provider contends is more neutral than leading DMA platforms owned by banks and brokerage houses.
"There's a fairly large vacancy in the marketplace now, which is the ability of platforms like us to offer our services for other broker-dealers so they can white label it as their own," says Murray Finebaum, president and chief executive officer at FutureTrade.
Consolidation in the direct-market access space -- led by Bank of New York's acquisition of Sonic Financial, Banc of America Securities' purchase of Direct Access Financial Corporation, and Citigroup's buyout of Lava Trading -- has created a void in the market, says Finebaum. "I think common sense is such that human beings are concerned when we're dealing with a competitor's offering. And I'm not commenting on their ability to maintain a Chinese wall or not. I think people are just concerned and that's a natural reaction," says the CEO.
"Certain customers have expressed concern about dealing with a platform that's owned and operated by a large broker-dealer who's in the business of sales trading and proprietary trading," says James Kwiatkowski, executive vice president, sales and marketing, based in FutureTrade's New York office. In FutureTrade's case, it partners with prime brokers and broker-dealers. "The technology is not owned and operated by them and therefore they have no access to the trade data," says Kwiatkowski.
With the white label model, brokerage firms can put their own names on the product. "Obviously, when a broker-dealer uses our platform, the trades are done under their name. They are cleared by them, but in real time they don't see that happening," says Finebaum, noting this leaves the client anonymous to the marketplace.
"This will allow these brokers to position themselves as leaders in the electronic trading space," says Kwiatkowski. Hosted on an ASP (application service provider basis), Kwiatkowski says his firm is providing a turnkey solution inclusive of sales, support, installation and after-sales support.
FutureTrade's DMA platform, which reaches all North American stock, as well as five options markets, is currently being used by 200 clients including hedge funds and two large bulge bracket brokerage firms. Though it was announced as a new client in May, Capital Institutional Services (CAPIS), a large soft-dollar broker, went live with the system in November when it did its first trades. FutureTrade began the integration process in the previous quarter. In addition to the trading tools, it gives clients the regulatory reporting they need to comply with Nasdaq and data they need to comply with the NYSE, and it supplies trade details to buy- and sell-side order management systems to facilitate STP.
Finebaum says going forward, the firm is targeting major brokerage dealers as well as significant regional firms. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio