10.03.2011
By Terry Flanagan

Nirvana Bolsters Trading Platform

Nirvana bolsters its year-old options software and readies for moves into FX and futures.

Responding to the increasing interest by retail investors in exchange-traded derivatives, long-time trading platform provider Nirvana Systems just bolstered its year-old options trading software and it is prepping the launches of foreign exchange and futures trading for later this year.

The Austin, Texas-based firm also entered a joint venture earlier this year with Transcend Capital, a broker-dealer catering to blackbox, algorithmic and other high-volume traders, to gain more direct access to the commissions its software generates.  Nirvana customers can now trade directly through Transcend, or through MB Trading and Interactive Brokers, whose systems Nirvana’s software has been integrated with for several years. They can also use Nirvana’s software independently and punch in trades through their broker-dealer of choice, although that’s less efficient.

Ed Downs, president and CEO of Nirvana, said the firm plans to offer foreign exchange (forex) and futures trading by year-end. Its decision to launch trading in those financial instruments as well as options, which was initially launched a year ago and upgraded in early September, was prompted by internal surveys showing many clients already tapping those markets

In one recent survey, for example, the percentage of Nirvana’s customers already trading options was 39%, while 20%  traded forex. “Four or five years ago, it was less than 20%” trading options, Downs said.

In the futures arena, 23% of clients were already trading the Chicago Mercantile Exchange’s highly liquid E-Mini S&P futures, and 15% were trading other futures contracts.

Nirvana launched its flagship OmniTrader platform more than 15 years ago. In terms of option contracts, the software translates the Greeks, or the quantities representing the sensitivity of an option’s price to the underlying parameters on which it’s based, into visual form. That facilitates investors research into trading strategies and finding the optimal options series for their risk tolerance by adjusting the graphical image, while the software crunches the numbers in the background.

“It avoid the need for traders to plug in numbers to calculate the Greeks,” Downs explained.

The trading platform Nirvana and Transcend currently provide to customers and jointly own is called GX Trader. Transcend, which clears through Dallas-based Penson Worldwide, is currently the broker-dealer of record for the platform, although the two firms plan to launch a separate broker-dealer devoted solely to GX Trader. Customers of GX Trader have free access to Nirvana’s trading software, which the technology vendors sells under a different name for more than $3,000—a draw for those still trading over third party platforms.

Butch Jones, CEO of Transcend Capital and former founding member of CyberTrader, one of the early broker-dealers providing direct-market access services that was acquired by Charles Schwab, said the firms are still deciding the best way to accomplish this.

Jones said Transcend, which trades north of five billion shares a month and specializes in high-volume, low cost trades, realized its systems and relationships were inappropriate for retail investors, a market it was interested in pursuing. “So we needed a partner with a proven track record on the retail side, and that already had cutting edge technology in place,” Jones said, adding that setting up a broker-dealer to support GX Trader is another step in that direction.

“Retail clients want to deal with one entity and have as seamless an experience as possible,” Jones said.

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