The race to integrate brokers' pre-trade analytics into order management systems (OMSs) is heating up as buy-side customers demand the functionality.
In late June, Lehman Brothers went live with pre-trade analytics over Charles River Development's (CRD) OMS. In early July, Lehman announced that it also would be delivering pre-trade analytics over the Bloomberg Professional service. And other partnerships are in the wings, relates Dave Cushing, Lehman's managing director of equity analytics and algorithmic trading, though he declines to name the other OMSs.
According to Cushing, Lehman is among the first brokers to implement single-stock analytics. Portfolio analytics, he notes, are more established. "You can essentially preview the [market] impact and the risk characteristics of a proposed algorithmic order," says Cushing of Lehman's single-stock pre-trade analytics. Users can click on an order in CRD and a window opens, prepopulated with the stock symbol and number of shares. The user then can make a trading decision based on the analysis, explains Cushing. Next, Lehman plans to provide an execution tab, so users can manipulate the algorithmic trading parameters, he adds.
Currently, Charles River is working with six bulge-bracket firms, including Lehman Brothers and Citigroup, to offer pre-trade analytics. But Lehman is the first out of the gate, according to Steven Engdahl, CRD's director of product management in Boston. "Our buy-side customers are driving" the push for integrated pre-trade analytics, he says.
By early summer, Latent Zero had integrated pre-trade analytics from agency broker Investment Technology Group (ITG) - namely ITG Logic and ITG ACE - and was working with two other brokers, which ITG declines to name. "We've done the integration," says Gail Romano, director of the company's North American operations in Boston. "It's been tested [with ITG], and we're identifying clients that want it." Meanwhile, ITG is in the process of acquiring Macgregor, the Boston-based order management network.
While Macgregor customers use the provider's software development tool kit (SDK) to view analysis from customer applications inside the Macgregor XIP OMS, buy-side firms want the pre-trade analytics to reside within the OMS desktop, according to John Krowas, director of advanced trading solutions at Macgregor. This would enable them to take advantage of all the controls - including compliance, order routing and commission tracking, he explains. "They have to get access to all the controls and then be able to do the analytics and submit the order," Krowas says. 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