Watcher Technologies has released a new version of its WatcherPlus trading platform that gives traders the ability to express their ordersand execute if the order is routed to the Island electronic communication network (ECN)in decimals. Despite delays in the conversion process, it is still expected that the major exchanges in the United States will convert from a fraction-based pricing system to one based on decimal figures sometime next year. By providing a product that gives traders the chance to accustom themselves to decimal pricing, Watcher is hoping to capture the market of traders who want to be prepared.
"The way we set it up is that the trader can switch back and forth whether displaying or entering orders in fractions or decimals on the fly so they can get a feel for it," says William Hanisch, chief architect for Watcher Technologies. "They will be getting more and more used to viewing market data in decimals and it will be better for them in the long run. They'll be ahead of the game."
WatcherPlus is client-server software that sits on a PC. The trader is either connected to the system through a secure extranet that Watcher maintains, or the trader sits in-house at a Watcher location. Watcher will be offering a virtual private network (VPN) solution that is Internet based which brokers can use to communicate with their clients.
The software links the trader to Watcher's back-end processing which connects to Island, Nasdaq and other ECNs. "Island allows decimal trading and Island is one of the main places where our traders send their orders. Furthermore, with the new system, when they trade with decimals, they'll get converted to the best price if it's with other exchanges," says president of Watcher Technologies Paul Hindes.
Hindes says there are no other U.S.-based firms that offer software for trading in decimals. He adds, "Honestly, it's because they couldn't get it together. It's really hard if you're dealing with legacy systems where all of the systems are based on fractions and all of the systems that you interact with are in fractions. We're not burdened by a lot of the stuff that other companies are."
Hindes names TradeScape and CyBerCorp as competitors in Watcher's market niche. President of TradeScape Technologies Omar Kachwari says that traders are creatures of habit who are not going to convert to decimals until they have to. "I think its the decimalization feature of WatcherPlus more for show than anything else because decimals haven't really gained a foothold in the active-trader market," says Kachwari. TradeScape currently offers no platform where brokers can experiment with decimalization but plans to release such a product by the end of the summer. CyBerCorp chose not to comment on the decimal feature of WatcherPlus.
Hindes adds, "I think our customer's traders will have the experience of working with decimals and that will give them an edge as the rest of the industry goes into it because there is a little bit of a learning curvea transition curve."