Trading-Technology Q&A: John Adam, FactSet (Part 2/2)

Terry Flanagan

Markets Media recently spoke with John Adam, Senior Director, Portfolio Management & Trading Solutions at FactSet. The first segment of the Q&A focused on the big picture; what follows is about the past, present and future of FactSet Trading Solutions. 

FactSet bought Portware in 2015. How has this acquisition enhanced what FactSet can do for clients and how does the franchise continue to move forward?

As good as Portware was before the acquisition, it was an empty container. This is true of virtually any EMS out there. So a new Portware client would need to select a market data vendor, determine how they’re going to interface with the order management system, what they’re going to use for their security master, what various analytics and TCA packages they’re going to use for their trading workflow, etc. There’s nothing wrong with that, but it requires more work up front in order to reap the benefits of a thinking EMS.

Portware Enterprise, a FactSet Trading Solution, is now fully integrated into FactSet’s ecosystem. It is fully compliant with and can read feeds from FactSet’s market data; it is fully tied in to the trader workstations; it is fully tied in to the portfolio analytics platform. So, the world of the EMS all of a sudden becomes much larger and more vivid, because it’s tapped in to technology that’s used to manage and provide analytics for 3.2 million equity portfolios globally.

In 2016 we acquired Cymba, an order management system company. We fully integrated that into the FactSet product suite as well, so what was previously two distinct platforms — a separate EMS and OMS — is now an OEMS, with both legacy and new clients using as much or as little functionality they need within that integrated framework.

FactSet has a massive client base, and as good as a standalone EMS can be, it is exponentially better as an interoperable part of the broader portfolio lifecycle.

We have been kind of in ‘stealth mode’ with regards to Portware for a while. But FactSet acquires and integrates very intelligently, and the resources that are available to us in the portfolio management and trading solutions business unit, to invest not only in Portware Enterprise, but also the rest of the technology stack, are staggering. As an independent you have to grow very cautiously in order to maintain a sustainable business, and when you’re a startup you sweat every head you add. FactSet has really given us the luxury of building into that integrated ecosystem for the long term, which I think is an advantage that no other EMS on the market has. There are a couple companies with EMS solutions that are well-integrated with a monolithic technology stack, but I think we’re the only ones out in the market with an open platform that integrates with first- and third-party solutions and gets the kind of investment, care and feeding that some other startups or independent firms can only dream about.

Where is the growth in your business?

John Adam, FactSet

By geography, across all of FactSet, APAC is growing fastest, then EMEA, then the Americas. Front and middle office solutions like Portware and our Portfolio Management Platform continue to be notable drivers of growth for the firm. Our Content and Technologies Solutions business unit just launched a new platform that’s getting a lot of uptake, called Open:FactSet Marketplace, or OFM. OFM is effectively a digital marketplace where both FactSet and third-party data and applications, including quantitative tools and alternative data sets — like shipping data, ESG data, contextual analytics, and so on — are made available, scrubbed and mapped to FactSet’s consistent symbology for use across FactSet applications. It’s pretty exciting stuff.

In addition, while the OEMS space is hardly new to the people within portfolio management and trading who came from Portware and Cymba, it’s new to FactSet. So not only is there that strong foundation on which to build, there is investment from FactSet that wasn’t available to either Portware or Cymba as independents. It’s an amazing opportunity to have this foundation and be able to offer our own energy and expertise, aided by the strong tailwind of the broader FactSet organization.

What is the future of systems, processes and workflows in financial services, and how will FactSet meet evolving client needs?

When we go home for the day and go back to being private individuals and consumers, we’ve come to expect a higher standard of integration. I expect Amazon to know what I was shopping for on my mobile device when I log into my PC or if I talk to an Alexa.

What I expect to see as a business user is an increasingly interconnected ecosystem and experiences that will be delivered by more than one vendor, but which will all operate in harmony. This trend is not unique to financial services. It spans disciplines. As the world moves from a siloed workstation mentality to an open workflow mentality, I expect my desktop to be smart enough to recognize my role and function within the investment process, and to know the pieces of information that are most relevant to me in terms of my workflow.

On the trading desk, we’re often seeing traders handling multiple asset classes, and segmenting themselves into high touch and low touch. A high-touch trader working on illiquid securities has to pick up the phone to put a deal together. This can be a high yield bond trader, but they might also be taking on a difficult FX trade or even an illiquid equity. A low-touch trader is behaving much more like a programmer — writing intelligent rules and working with our AI capabilities to come to the best possible outcome so that when they intervene, they’re intervening by exception.

The discipline is evolving around the technology, and the components themselves need to plug into an ecosystem to make sense of it all. We’re upgrading our infrastructure at FactSet — client production, our internal MIS, and we’re opening up our technology. We’re designing with the API in mind first — it’s gratifying to see this change take hold in the industry; that the fact that you have to have an API into your technology is a foregone conclusion. We’re not adding it after the fact; rather, we’re reengineering from the ground up around this open ecosystem so that when we have the opportunity to plug into our client’s portfolio and trade lifecycle, we can do so as seamlessly as possible.

We have seen the openness trend, and we are absolutely running towards it.

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