This mid-sized broker (“Broker-X”) has a specialized niche business driven around their proprietary research. For years, Broker-X has invested in their electronic trading capabilities by white-labeling algos from certain bulge bracket firms. As their electronic distribution grew, so did their related connectivity expenses. Unlike traditional cash business, you cannot just pick up a phone to trade algos. FIX connections need to be established in order to do business with electronic trading customers. That FIX connectivity carries a significant cost. By converting their FIX connectivity to Itiviti, Broker-X was able to leverage Itiviti’s Network Optimizer product and reduce their network related connectivity expenses by 19%. That savings funded the Itiviti connectivity service for the client.
Broker-X is a regional, US-based mid-size broker dealer. They operate a specialized niche business driven around their proprietary research and have made significant investments in their electronic trading capabilities by white-labeling algos from certain bulge bracket firms.
When cost pressures became a competitive issue for Broker-X, they needed to find areas of the business where efficiency could be improved, savings could be realized, all without sacrificing quality. Providing electronic trading to 120 buy-side clients, required Broker-X to build and maintain an expensive and complex telecom, network and server infrastructure. Having to manage contracts with multiple vendors, telecom suppliers and service providers was not only adding administrative burden, it was detracting resources from their core business. All of these issues were limiting their ability to scale and at the same time costs were increasing as they struggled to keep up with competitors.
Another problem that Broker-X faced was their aging Order Management System (OMS). Built in-house, many of the employees and consultants that originally designed and built the system had since left the company. Although handover processes had been made, as time went on documentation become outdated and detailed knowledge about the inner workings of the system became scarce. The OMS also was unable to handle much of the requisite tag enrichment that the industry expects nowadays. Changing the OMS would have elevated risk and allowed them to increase capacity, but the cost of re-certifying 120 inbound connections to a new OMS wasn’t realistic given the budget constraints.
Broker-X conducted a search to find a solution to these issues. Shortlisting Itiviti as a potential vendor, they began the due diligence exercise. Broker-X quickly discovered that the Itiviti Managed FIX offering solved many of their problems.
Analysis showed that Itiviti Managed FIX would provide the flexibility that would enable them to replace their OMS, reallocate internal resources and generally lower their total cost of ownership. However, Broker-X also concluded that they could also improve their service levels to their clients by quicker onboarding cycles and increased transparency into their FIX connectivity. For them, Itiviti Managed FIX became an easy choice.
The migration was performed in parallel activity streams to mitigate risk. These included:
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