As more and more firms look for ways to trim costs off their IT and trading activities, Broadway Technology, a provider of high-performance trading solutions for banks and hedge funds, has started offering a hosted liquidity aggregator to the FX market that could offer sell-side banks better value for money.
Broadway, which provides front-office trading systems that offer services such as credit aggregation, connectivity to markets, smart order routing, spreading and other execution tools, is now offering a hosted service that will be located initially in New York, and later this year additionally in London and Singapore.
Broadway, which already connects to 22 banks and electronic communication networks (ECNs), says the target market for the new offering will be primarily second-tier and third-tier banks that don’t have the technology budget or the resources to build their own liquidity aggregators and e-commerce functionality, including co-location proximity.
"We are able to now bring some really powerful capabilities to a hosted offering. You can execute with your customers, and then automatically hedge out against FX markets, all with the same technology,” Tyler Moeller
“Traditionally, it’s been hard for these institutions to get high-quality execution capabilities and especially good e commerce capabilities,” says Tyler Moeller, Broadway’s chief executive, in an interview with EuromoneyFXNews. “It’s something these banks would struggle to build on their own. So really that’s our goal, to take this product – which is very mature and has been on the market for years – and now make it more widely available.”
Typically with this type of service, FX vendors charge their customers on a volume basis as well as for a software licence. For example, for every $1 million of EURUSD that a customer trades, that customer might have to pay $5 to the software vendor. Broadway says that the compelling point with its new offering is that it charges the customer only a flat fee for the use of the software.
Moeller says that the product will offer sell-side banks a powerful new tool that enables prices to be sent to customer distribution platforms from the same system running their liquidity aggregation and inter-dealer execution.
“This means we are able to now bring some really powerful capabilities to a hosted offering. You can execute with your customers, and then automatically hedge out against FX markets, all with the same technology,” says Moeller.
Broadway was founded in 2003 by a group of high-frequency algorithmic traders with extensive computer science backgrounds. Before co-founding Broadway, Tyler was a founding partner of KATS, LLC, a proprietary high-frequency automated trading group, where he traded US Treasury cash and futures.
Broadway provides its trading solutions via its high-performance distributed computing architecture, the TOC. The TOC makes it possible to build virtually any trading capability quickly and easily.
With the TOC, it is possible to combine any mix of technologies and also to scale to any number of users or machines in any number of locations. The TOC can be integrated with an existing infrastructure, and it allows the use of any mix of Broadway's products, other vendors’ products, and custom-built applications as a single cohesive system.
Moeller says the software now brings “extremely advanced pricing capabilities” to this new hosted offering. Clients can now, by using a rules engine, generate prices for customers based on any number of parameters, including the customer’s requested size, the customer themselves, inventory, market conditions, time of day, trader cues, or any other parameter they can think of.
For instance, if a customer executes against a price, the software then lets the user automatically hedge that trade, or their new position, based on rules and using Broadway’s liquidity aggregation to access bank and ECN liquidity.
Broadway says that the ability to tailor its services to suit different types of customers with easily configurable software that is easy to install will have a wide appeal to the broader FX market.
“There’s a large market for companies that just want to sign up, install something on their desktop and get moving,” says Moeller.