Buy Side Gravitates to Multi-Dealer Networks
Amid sweeping changes in the derivatives industry, buy side market participants are clamoring for the means to direct order flow to multiple broker-dealers, in a manner similar to that which exists for equities.
“The sell side is demonstrating a willingness to accept that it’s a multi-broker world, and they want to go on offense in order to attract buy-side customers,” said Tim Geannopulos, executive vice-president of global sales at Trading Technologies International, a provider of derivatives trading software.
Trading Technologies is planning to launch a managed software service, MultiBroker, which will enable clients to enter orders from its X_Trader platform and route them to any of its participating brokers through a direct market access network.
MultiBroker will allow traders to choose between brokers when routing orders directly to the world’s major futures exchanges through TTNet, Trading Technologies’ managed global hosting solution. Eleven major sell-side banks are participating in the beta program.
“Instead of routing orders to a single broker, with MultiBroker you will be able to route orders from a single X_Trader screen to several brokers,” said Geannopulos. “That is the number one request emanating from our buy side customer base, which is our fastest growing segment.”
Later in 2013, Trading Technologies also plans to offer a gateway to Eris Exchange, the U.S.-based futures exchange, through which it will connect its trading software to the Eris SwapBook electronic trading platform. Eris Exchange, which functions as a designated contract market, provides forward starting interest rate swap futures that are cleared by CME Clearing and traded on Eris SwapBook and Eris BlockBox.
The connection will enable Trading Technologies customers to trade benchmark Eris Exchange interest rate swap futures and inter-market spreads through Trading Technologies’ X_Trader trading platform and related products, including ADL and Autospreader.
TTNet provides gateways to futures, options on futures, fixed income and OTC products spanning more than 14,000 products, the company said.
TTNet “provides the infrastructure that MultiBroker will be built on”, said Mike Agnew, product manager at Trading Technologies. “MultiBroker will run as a single local network within TTNet, using a shared multi-tenant ASP model, which will be managed by us.”
In MultiBroker, separate pre-execution credit, position limits and margin are maintained by the broker for each user. Buy-side users have an integrated view of positions and profit/loss across all brokers, but can also create multiple filtered views by broker, market, product or portfolio, the company said.
“A single FIX drop-copy feed captures transactional activity across all brokers, eliminating the need for individual FIX conformance tests and individual connections with each broker,” said Agnew. “For clients who need integration with back-office FIX systems, switching flow between brokers becomes seamless.”
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