Buy-side Awards 2016
In the turbo-charged world of algorithmic trading, everyone is seeking an edge. Brokers try to grab more share of the market by innovating with new or enhanced algorithms. Buy-side firms try to steal a march on each other by being first to use them. But usually they have to wait for their trading platform provider to catch up. Bad luck if their provider is slow off the mark.
That's not the case for users of the latest version of TradingScreen's TradeSmart platform. Exploiting its cloud-based infrastructure, the company can now instantly implement new or enhanced algorithms and make them available to users as soon they are released by brokers. At the same time, TradingScreen does not force all users to migrate to the new versions, but supports multiple versions of an algorithm at the same time – also thanks to the cloud infrastructure. This allows leading-edge traders at a firm to immediately get their hands on innovations, while their more conservative colleagues continue with older versions.
TradingScreen launched the TradeSmart execution management system 17 years ago, in a software-as-a-service (Saas) format from the start, evolving to a cloud infrastructure as the technology advanced. Now it enables buy-side clients to trade a broad range of instruments, including funds, around the clock, on many markets with a wide range of counterparties. It features a customisable front end, and allows users to aggregate multiple dealers and multiple exchange-traded and over-the-counter products on a single screen for electronic routing of direct market access and discretionary orders to a large number of broker destinations.
Other enhancements in the latest version include the ability to search the system, with over 900 customisable functions.
"We are a 17-year-old company with 17 years of clients giving us feedback. When we enhance something in the system, we tend to do it as a configurable preference, because no trader likes to trade the same as the other guys. As a result, we now have over 900 preferences in the system," says Quentin Limouzi, chief revenue officer at TradingScreen, based in New York.
One of the drawbacks – as with other systems – is many of the preferences were hard to find and the flexibility of the system was somewhat lost. "So we made a tool in the latest version to search and query the preferences. It sounds trivial, but is really helpful. We're trying to make it easier for people to use the system to its full capacity," says Limouzi.
The company has also enhanced support for basket trading, with the ability for benchmark tracking at the basket level as well as the individual trade level, while making visualisation tools such as heat maps and charts available for basket trade analysis and real-time monitoring.
We are a 17-year-old company with 17 years of clients giving us feedback. When we enhance something in the system, we tend to do it as a configurable preference, because no trader likes to trade the same as the other guys. As a result, we now have over 900 preferences in the system
Quentin Limouzi, TradingScreen
Although baskets are benchmarked to a single value, such as volume-weighted average price or closing price, the implementation of the trades are subject to the trader's discretion in order to achieve the benchmark. TradeSmart now allows traders to track individual lines against the overall basket benchmark as well as against the trading strategies of the particular lines.
TradingScreen has over 750 clients and more than 1,200 individual users, 45% of which are hedge funds, 35% asset managers, pension funds and insurers, and the rest banks. The company offers trading algorithms from over 200 broker connections across a wide range of asset classes.
Recently, the company has been extending TradeSmart beyond its execution roots with modules to support order management activities, such as allocations, positions, and profit and loss, including advanced visualisation tools.
"Historically, we have been trading-oriented, but we are getting serious in the order management system space, where portfolio managers use our system to manage their positions and identify where they need to trade and then pass the order down to the traders," says Limouzi.
In 2014, to address concerns about bond market illiquidity, TradingScreen partnered with 15 European long-only asset managers to launch the TradeCross crossing platform for fixed-income corporate bonds. TradeCross covers all segments of the credit market, including investment-grade, emerging markets and high-yield, and allows users to negotiate anonymously only with those counterparties that are within their preferred price range. Early supporters included Nordea Investment Management, PGGM and Natixis Asset Management Finance, and the crossing platform was formally launched in July 2015, with an Asian version in partnership with the Singapore Stock Exchange.
As financial services follows other industries in migrating to cloud- and web services-based infrastructures, TradingScreen is reaping the reward of adopting the hosted application model with online access from the outset.
"Saas is a powerful advantage for us. Our time to market is so much quicker than competitors that require on-premises installation. Our system can be up and running in a day," says Limouzi.