Goldman signs up Imagine for prime brokerage

Goldman Sachs is to offer Imagine Software's ASP risk management and trading services to clients of its prime brokerage unit, GSI Prime Brokerage, formalising a partnership begun last year in which GSI clients started using the Imagine product.

Steve Harrison, president of Imagine, said the system facilitates STP for Goldman Sachs' prime brokerage customers.

"Clients use Redibook for the front-end order routing," added Scott Sherman, principal at Imagine. "When it gets filled, we pick up the data and drop a copy in real-time from Spear, then we send off those trades to the hedge funds' corresponding administrators and custodians."

Imagine's ASP-based platform, Derivatives.com, redistributes real-time prices and corporate actions, and the service bureau behind it processes end-of-day reports, calculates stock splits and projects dividends. Imagine provides proprietary data, but the client firm or Goldman can override the system with their own data. The system also calculates value-at-risk in real time by the end of the trading day, rather than on the following day, as do most systems.

Goldman has committed to send a "certain number" of clients Imagine's way, Sherman said, declining to be more specific.

In the fourth quarter of last year, Imagine began working with Goldman Sachs and came up with some specific functions for its prime brokerage clients. These included support for long-short funds, derivatives funds and convertible arbitrage funds.

Clearing is achieved through direct interfaces to Goldman's back office. Direct order routing to Redibook, with broker/dealer services from Goldman subsidiary Spear, Leeds & Kellogg, is also part of the system's functionality, though Derivatives.com is not itself an execution platform.

Derivatives.com partitions its Sybase database so that each prime brokerage client's database is kept separate, said Harrison.

Imagine's client/server system, the Imagine Trading System, is used at Deutsche Bank, First Union and Salomon Smith Barney.