Capital Institutional Services (CAPIS), the global agency brokerage firm based in Dallas, said it's moving to the Fidessa trading platform as a replacement for its proprietary order management system. "Technology wise it's probably the most important decision we made in our 30-year old firm," says Jim Morrow, COO at CAPIS in an interview on Friday.As sell-side firms scramble to upgrade their trading platforms to handle more algorithmic trading, international securities and derivatives, many like CAPIS will weigh the build vs. buy decision. By the end of January 2008, CAPIS expects to decommission its proprietary order management system and replace it with Fidessa on its U.S. options and cash equities and international equity trading desks. "In our search for our product, Fidessa stood out as a product for an institutional agency desk," says Morrow. "We're taking every piece that they have," says the COO. Specifically, CAPIS will use Fidessa's standard institutional trading system, plus all the connectivity that Fidessa offers to brokers, exchanges and execution destinations, and the program trading module known as BEAM, which stands for Basket Execution and Management. According to Morrow, BEAM competes with rival systems FlexTRADER and Portware. "We had been using Portware on our program trading desk along with our proprietary system and it compared very favorably with Portware and the integration with what exists on the desk is very good," shares Morrow.
In addition, CAPIS is taking the Fidessa Framework, a tool, which expands upon the Fidessa BlueBox a set of six off-the-shelf algorithms, and allows the firm to customize, build and tweak its own algorithms. "We were very impressed with the tools they gave us. It's really designed for a programmer but it's very simple to use," says Morrow. While CAPIS has a couple of algorithms that it built into its proprietary OMS, such as simple volume weighted average price algorithms, the Framework will allow it to build much more detailed algorithms taking in more characteristics, he says.
The shift to a third-party OMS is a major step for CAPIS, which developed one of the first proprietary OMSs to use the FIX Protocol. Prior to heading down the path of internal development, CAPIS had been using the Merrin Financial System for sell-side trading since 1992. But after shopping for systems, the only sell-side system available was BRASS and that was for market making firms, not agency-based institutional trading firms, notes Morrow. CAPIS then spent two years building its own OMS system around FIX using the protocol to deliver orders to traders and provide electronic connectivity. "We have constantly enhanced and used it until today."
But in January and February of this year, CAPIS decided to redeploy the resources it was spending on its OMS and focus on three or four other development projects. At the time, the institutional broker looked at five or six sell-side OMS systems and talked to the users about what CAPIS had in its proprietary system. At that point, CAPIS could have enhanced its own system or used its system in combination with another system such as FlexTrade or Portware, or could have bought another systems outright, says Morrow.
But since it had eight programmers working on the OMS that were also involved in redeveloping systems for the Reg NMS world, it decided to take those programmers and move them onto other projects. CAPIS will reallocate those IT resources to build more customized client facing systems to support the business of client commission sharing arrangements (CSAs) in the soft dollar area and for its transition management business, says Morrow.
Winning CAPIS is a coup for Fidessa, which has been gaining in market share and it falls on the heels of the Stanford Group Company, going live on Sept. 10 with Fidessa's fully hosted OMS trading platform where it replaced SunGard BRASS. According to Morrow, CAPIS examined six vendors that were playing the sell-side trading space, discovering that some were more niche providers although they described themselves as full-featured OMSs. While the bigger providers of sell-side OMSs would include SunGard BRASS and Fidessa, CAPIS also considered Bloomberg, FlexTrade Systems and Lava Trading. "In our search, it really narrowed down to SunGard and Fidessa having the most full features with a firm for a block trading desk," says the COO. But in the end, "Fidessa was a superior product," says Morrow.
In terms of international equities trading, Fidessa offers a new product called Workstation that came out of its European operations. "That product is going to be rolled out on our international equities desk," says Morrow. (Workstation is an order entry and international quote system used in Europe, which Fidessa is trying to tie into their OMS and roll out to the buy side, says Morrow.) Since Fidessa doesn't handle fixed-income, CAPIS is in discussions over moving its fixed income desk over to the Bloomberg system. Morrow says he expects to finalize the decision quickly over whether to keep its own proprietary system or roll fixed income into Bloomberg.
In the meantime, CAPIS is reviewing its proprietary OMS and integrating any changes it needs in Fidessa. Plans are to run Fidessa on its trading desk in early December and then run both systems side-by-side. CAPIS expects to go live with Fidessa on Jan. 25, 2008, at which point it will decommission the old system.Capital Institutional Services (CAPIS), the global agency brokerage firm based in Dallas, said it's moving to the Fidessa trading platform as a replacement for its proprietary order management system. "Technology wise it's probably the most important decision we made in our 30-year old firm," says Jim Morrow, COO at CAPIS in an interview on Friday. 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