Gateway Financial Solutions is planning to go live on Wednesday with FIXChange.net, a network for connecting buy- and sell-side traders directly to independent floor brokers on the floor of the New York Stock Exchange. The system, which purports to be third-party agnostic, will allow traders direct access to subscribing independent brokers via the NYSEs Broker Booth Support System (BBSS) and e-broker hand held device. Gateways revenues will come from charging the NYSEs independent brokers based on volume transacted over the network.
The FIXChange.net concept emerged over a year ago when A.W. Bertsche, a NYSE member and an investor in Gateway, attempted to sway NYFIXthen known as Trinitechto open up its NYSE trading network to non-member brokers, as well as money managers that transacted over different order management systems. For non-member firms, there isnt presently a way to get orders to the floor, unless youre using Trinitech and Trinitech has limitations, says Todd Bertsche, ceo of A.W. Bertsche. You needed to have Trinitechs own hardware. And, if you look at the floor of the NYSE, you see a ton of people and not a ton of space. You dont need more hardware limiting your booth space.
When it became apparent that Trinitech was unwilling to accommodate Bertsche, the firm approached Javelin Technologiesa FIX specialist that is also an investor and partner in Gateway Financial. Javelin agreed to provide not only the FIX software, but also the technical resources for the maintenance and operation of the FIXChange.net servers.
Besides the hardware issue, Bertsche says that another sticking point with NYFIX is that at the time it was approached, it did not offer handheld deviceswireless mechanisms that allow floor brokers to execute transactions while on the move. NYFIX is about to release a handheld device that allows lookups, but not executions.
FIXChange.net could prove to be a boon for institutional money managers who want direct access to the floor and greater control over their orders. The idea here is that institutional traders want to be able to get direct access for some types of transactions, explains John Petschauer, ceo of Gateway. Theres still a need for them to go to the big broker/dealers for other types, but there is a growing need for institutions that want to transact anonymously, and get very quick execution and have someone be, really, a smart limit order book on the floor for them.
In order to use FIXChange.net, traders will first have to route orders through the Autex Groups TradeRoute order routing system. TradeRoute will then feed those orders to FIXChange.nets servers, which will reside at server farms supplied by Transaction Network Servicesthe vendor that is handling FIXChange.nets facilities operation and management. Orders are then passed along, via the FIXChange.net servers, to the NYSEs BBSS and e-broker.