Making Connections
Last year, Macgregor announced that it struck a deal to embed Lava Trading's direct-access tool into Macgregor XIP, which gave buy-side traders access to the full depth of book, intelligent order routing and direct connectivity to major exchanges, ECNs and alternative-trading systems. That was followed a few months later by an announcement that Charles River Development and Lava had also struck an alliance in which Charles River would incorporate Lava into the Charles River Investment Management System. Traders can initiate an order from either firm's blotter.
Linedata Services and New York City-based direct-access provider Sonic Financial Technologies have a strategic relationship that provides a real-time link between SonicStorm and the LongView Trading System. It eliminates the need for traders to toggle among applications. And LatentZero has a number of connectivity options with firms like Lava, Instinet and its Newport system, as well as ITG's Posit crossing system.
There are different approaches to integration taking place among OMS and DMA vendors, notes Steve Alepa, executive vice president of Macgregor financial network in Boston. "There are different degrees of integration, ranging from straight FIX connectivity to what we call blotter-to-blotter connectivity." Clients' don't want another box on their desks, he says; they favor "true interoperability."
Michael Hayes, director of strategic alliances at Charles River, says his firm is working with as many of the DMA vendors as it can. There are two stages to the integration, he relates. "The first is the ability to execute a single order or list of orders from an OMS electronically into the DMA tool." The second stage is "more tightly integrated, where some, but not all, of the DMA functionality is accessed directly in the OMS."
John Bird, product manager of Advent's Moxy, says, "We want to work with whomever." But, given that many of the DMA providers are being scooped up by broker-dealers, he's not sure that buy-side firms will be interested in full blotter integration. "Some firms are hesitant to go forward with that," he says. However, "We may move to a more API [application program interface]-based integration over time," he adds, depending on client demand.
Traders "want the ability to send FIX messages from one system to another," Bird says. "They want enhanced FIX integration."
Annie Morris, senior vice president of product strategy at Linedata, says, "The OMS is really the quarterback on the buy-side desk. [DMA vendors] understand it's in their best interest to work with the OMS vendors. We provide functionality that DMA and ECN aggregators do not provide."
Steve Steffy, operations supervisor at BPI Global Asset Management in Orlando, Fla., is watching the developments with interest. His firm recently adopted the LongView OMS with an eye to adding DMA functionality down the road.
"LongView is the first step down that path," he says. "Right now, our traders are used to the phone." But the firm's parent company, a Canadian mutual-fund firm, uses an OMS and DMA technology and, Steffy says, "They have increased their volumes tremendously."
One ability that Steffy finds attractive to a tightly integrated offering is accuracy with one entry point for the information. "The second is getting down to the floor and to the market quicker," he adds. A third benefit is the ability to do basket trading faster. "We'll be able to send this straight down to the desk to fill it."
The trick, however, is "getting a competent system in place and an infrastructure," he says.
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