Single-Dealer Portals Offer Live Prices to Debt Buyers
February 22, 2010
Web portals featuring the services of individual dealers are in vogue again, with sell-side banks such as Barclays Capital and Morgan Stanley delivering uninterrupted streams of live, constantly updating prices on fixed income products to their customers' screens. No downloads or software installs required.
Employing visually appealing graphics and, in some cases audio and video, these "rich Internet applications" or RIAs are being marketed as hassle-free platforms for banks and their customers to trade in asset classes ranging from currencies to government bonds to interest rate and credit default swaps.
These advances in providing data faster and in a more useful and rich manner to the screens of traders have led banks to rethink their portals and how they can use them-along with the multi-dealer systems and the phone-to communicate and trade with customers.
"It is important to have an individual brand and storefront that keeps active customers engaged," says Kevin McPartland, senior analyst at Tabb Group. Because "sometimes if I know I want a Mac rather than a PC, it's easier to go to the Apple store." The latter is analogous to a buy-side customer seeking a specific trade or pricing online from one longtime or trusted bank counterparty.
The rich applications for single-dealer portals, which also feature charts and news feeds, are generally constructed by the banks on technology sold by three primary competitors: Caplin Systems, Adobe Systems and Microsoft.
Caplin is the leader in rich applications in capital markets. Adobe and Microsoft are newer entrants, whose products are widely deployed in American businesses of all types.
Caplin's Caplin Trader development framework uses the open-source Ajax programming language to let dealers build trading workstations that run on their customers' browsers. Adobe offers an open-source toolkit for developers called Adobe Flex. This is based on Adobe Flash, the well-known Web animation technology. Microsoft sells a proprietary toolkit for building multimedia online applications called Silverlight.
What powers these applications to display large amounts of continuously updated information in graphically rich ways are streaming machines known collectively as "comet" servers.
These comet servers automatically push updated prices on fixed income, foreign exchange and their derivatives as their prices change in real-time directly into the browsers on users' computer screens. Caplin's is known as Liberator; Adobe's is the LifeCycle Data Service (LCDS) server; Microsoft doesn't offer a comet server, but Silverlight is compatible with comet servers from many commercial providers, including Milan-based Lightstreamer and its server of the same name; Mountain View, Calif.-based Kaazing and its Gateway server; and London-based my-Channels with its the Nirvana server.
Streamed prices are uninterrupted. They're displayed continuously using the technology: Screens don't need refreshing.
"All of the single-dealer platforms are working on fixed income executable streaming prices to big buy-side clients," says Vivake Gupta, managing director of Lab49, a technology consultant.
Streaming prices are manna to the buy-side. This is because they allow faster-moving markets than they are typically given in fixed income trading: Institutions are predominantly restricted to requesting quotes from the banks.
Lab49 helped Morgan Stanley implement Matrix, a rich application based on Adobe Flex that the bank launched in June. Matrix offers live pricing for trading derivatives and foreign exchange, although Morgan Stanley plans to extend the system to all fixed income products.