09.20.2012
By Terry Flanagan

Regulations Spur Front and Middle Office Consolidation

Regulations and market structure changes are putting sell-side firms under pressure to solidify their trading infrastructures.

Many of these issues will be discussed this week at the Security Traders Association conference in Washington, including large trader reporting, tick size analysis, the Volcker Rule and the market access rule.

Firms such as Keefe, Bruyette & Woods (KBW), a full-service investment bank and broker-dealer specializing in the financial services sector, are using Fidessa’s sell-side trading platform in order to consolidate front and middle offices.

KBW has leveraged Fidessa’s U.S. and European sell-side trading platform for more than eight years to support its equity sales and trading businesses across North America, Europe and Asia.

“It’s a longstanding relationship,” said Justin Llewellyn-Jones, chief operating officer at Fidessa U.S., a trading and technology company. “Back in 2004, when we first signed KBW, they had a U.S. domestic focused, very high-touch tactical full-service investment banking and brokerage business. Today, the brokerage and capital markets community provide diversified services, coupled with low equities domestic volumes. KBW has evolved into the international market, opening offices in both London and Hong Kong, trading international equities, and Fidessa is providing solutions for all of those businesses.”

Fidessa provides KBW with execution capabilities through its global order management system (OMS), including algorithmic trading, pairs trading, indications of interest, direct market access and compliance, as well as functionality to support client allocations and trade confirmations.

The integration of the front and middle offices, coupled with the Fidessa network and connectivity services, gives KBW the benefits of a consolidated platform.

“We wanted to exploit the efficiencies of a single consolidated platform across the front and middle office,” said John Ragan, director of equity trading at KBW, in a statement. “Naturally, our requirements have changed over the eight years we have worked with Fidessa.”

Since 2004, KBW has “put together a set of execution services for the buy side, extending beyond simple high-touch to aggressive use of direct market access and algorithmic order flow”, Llewellyn-Jones at Fidessa said. “In addition, KBW has spent a lot of time in the middle office space around client allocations and trade confirmations. The service elements of brokerage are very important, and KBW is taking advantage of Fidessa’s scale to offer execution services globally.”

Related articles

  1. Agency broker moves beyond execution to offer a broader suite of services.

  2. Algorithms have become more prevalent in the spot FX market.

  3. Congress Unlikely to Act on HFT

    QB’s Algo Suite for futures market trade execution is also being co-located to HKEX.

  4. Breaking data silos is key to deploying automation beyond 'nuisance' orders.

  5. They can be used on quantum hardware expected to be available in 5 to 10 years.