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Foreign Exchange

FX news: Sneak peek of Morgan Stanley's Matrix

Morgan Stanley’s Matrix platform has been a hot topic for the past year. I wrote a piece about it in February that got aggressively reposted around the web (Morgan Stanley hopes for Matrix revolution). In all honesty, I was fairly sceptical about the whole thing.

Google ‘Morgan Stanley Matrix’ and the web is awash with similar scepticism. The geeks have been bitterly fighting it out on the blogs to decide if its Adobe Flex technology beats Microsoft Silverlight, or whether the back- and front-ends are single-threaded or multi-threaded (for the record, Matrix is multi-threaded).

Rumours have abounded that the whole thing was being shelved because the demo site had been down for months and there were said to be internal strife, and issues with liquidity – “Jealousy,” according to Morgan Stanley’s spokesman.

So when we were invited to have a look at the ‘multi asset trading and research platform’ in action at Morgan Stanley HQ, I was confident I wouldn’t be impressed.

I was wrong. I am.

Matrix is an RIA (that’s geek talk for ‘the platform runs solely through the web so you don’t have to download any pesky software to your desktop’), built using Flex – a first in the platform field. Flex, traditionally, has been used for complex multimedia apps like the BBC’s iPlayer and Yahoo’s Messenger.

In action, the whole thing is extremely slick and well designed. It is a seriously cool bit of kit to have on the desktop. If Autobahn is Pacman, then Matrix is Call of Duty 4. Clearly a huge amount of thought (and cash) has gone into it.

The research, commentary and videos sections are very impressive. Users can access house research and many of their traders and economists provide commentary and tips, which can be added and saved to the user’s personalized ‘My Matrix’ tab. We particularly enjoyed the fact that all morning meetings are videoed (which run instantly by the way; no loading time) and added to Matrix so users get the feeling of the trading floor.

Guy Hopkins, European head of e-commerce sales, who ran us through Matrix said: “It’s a platform for both content delivery and execution - and the content on its own has proved enough to win desktop real estate.” That may be the view of Morgan Stanley but in the real world it is more than just looks that will win that prized desktop space.

Tight pricing is generally high on a client’s list of priorities, as is latency.

"We have been aggressive with our pricing since the beginning of the year, and we are delighted with the results.

"We also understand the need to be there for clients in times of thin liquidity, and the positive feedback we received from our clients following the shocks in early May absolutely vindicates that.

"We are proud of our infrastructure, which from the beginning has been designed with low latency in mind. We work closely with our clients to minimise rejection rates, and it is rarely – if ever - a cause for complaint," he said.

But then he would say that, wouldn’t he?

When theweeklyFiX spoke to Morgan Stanley in February, Matrix had gone live in Europe with FX, government bonds, interest rate swaps and sovereign CDS. We wondered if just matching what other platforms were offering would be enough to persuade clients to switch.

At the moment, they have those assets in place. But Morgan Stanley is adamant that it has what it takes to compete with leaders in the field – such as Deutsche’s Autobahn, UBS’s FX Trader Plus and Barclays’ Barx – especially as there are a host of new additions on the way.

Hopkins told us that non-deliverable forwards were the next asset class to be added: "Dollar/Korean is the first line of streaming NDFs available in the next few weeks. We think that will really set us apart. Not many people have that and we’ve been asked by a huge number of macro hedge funds who want to do this with us."

Promising – although precious metals, equities and futures will not be available until 2011 at the earliest.

Traditionally Morgan Stanley has been the turn-to for real money and hedge funds, but Hopkins told us that isn’t the case anymore: "We are also aggressively growing our footprint in other customer segments where we have less market share, such as 2nd and 3rd tier banks and corporates. Matrix is a key pillar in that strategy."

Matrix is truly innovative technology and will no doubt be able to compete with some of the best single bank offerings, but it has a long way to go, especially if the bank’s showing in the Euromoney FX survey is anything to go by. Morgan Stanley shot up the ranks in e-trading to ninth from 19th this year, but in terms of market share, 2.27% is nothing compared with the top three. Morgan Stanley has made no secret about its desire to get to the top.

You have to admire the optimism.



 
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