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home > articles > March 3, 2007

Pivotal to the Future of the Buy Side: Product Profile

By Victor Anderson
march 1, 2007

Utilising Instant Messaging (IM) technologies is not new to the buy side, although technologies that automatically translate IMs to FIX messages in real-time in order to convey trade-related data, are finding traction. BST investigates Pivot Solutions’ IMTRADER.

The ability to communicate trade ideas in a secure, real-time environment, store those ideas for future reference, and convert instant messages to FIX-based ones, is clearly the way the global investment management industry is headed. It comes then as no surprise that a Boston-based vendor has been providing the technology to do just that for the past two years.

About Pivot Solutions
Pivot Solutions, headquartered in Boston and with a primary sales office in New York, was founded in 2004. The firm provides services and technology to the US institutional trading community through its flagship offering IMTRADER, an application designed to integrate trading technologies with instant messaging (IM) functionality.

IMTRADER has a client base in excess of 2000 who use the product to share market information, discuss trading needs, alert groups, exchange trade-related data between counterparties, and complete trades. This community includes over 350 buy-side firms who, according to Pivot Solutions, have used IMTRADER to trade over 3 billion shares.

Structure
The firm is backed by infrastructure and connectivity provider, Eze Castle Integration, and the following venture capital firms: Softbank Capital, Draper Fisher Jurveston Gotham Ventures, and Hudson Ventures.

Pivot Solutions' management team includes:

  • Furqan Nazeeri, founder and president, who founded Pivot Solutions in 2004
  • Edward Daciuk, vice-president, responsible for finance, accounting and human resources
  • David Levine, vice-president of engineering, responsible for product development, release management and technical support groups
  • Ed McDonnell, senior vice-president of sales

IMTRADER
IMTRADER integrates instant messaging, information management, research, and trading technology, providing users with what the firm describes as a "powerful productivity and customer service tool for institutional investment professionals".

IMTRADER is designed to interface with already deployed invest- ment management applications within buy-side firms; it therefore increases the speed of responses (investment decisions or other investment management-related tasks) and allows users to access information in a timely manner, while reducing costs and the potential for errors.

IMTRADER also allows firms to archive and access trade data – not only for internal functions, but also to satisfy investment industry regulatory requirements – by offering robust and reliable connectivity over an encrypted internal network. It also provides direct connectivity to the AOL Instant Messaging (AIM) network, giving users direct access to the AOL IM community.

Key IMTRADER features include:

  • Research integration and workflow – IMTRADER allows professionals to manage research and data volumes by organising, sorting, and distributing data based on key words and preferences. The application's 'blast functionality' enables firms to distribute a single instant message to any number of clients without having to cut and paste. It also allows the sender to track who received, opened and responded to messages, making it easy to target follow-up messages.
  • Direct IM-to-FIX trading – IMTRADER integrates with buy-side firms' OMSs; users can enter orders via IM, which are then converted to a FIX message and sent to the company's trading system with no delays or re-keying of data.
  • Compliance and security – The IMTRADER network complies with industry regulations and is designed to integrate with internal compliance systems. All conversations and activities are time stamped and archived, maintaining complete and accurate records that are readily available.
  • Search and retrieval – IMTRADER remembers every chat and message; individuals and groups can therefore search their 'history' to determine who they have spoken with about a specific topic or review chats previously held with a particular counterparty.
  • Anonymity – IMTRADER allows firms to create groups so that individuals can receive IMs and respond anonymously.

Pricing
Pricing is based on monthly subscriptions, which can include per seat and/or per message fees. Current user firms

  • Jefferies & Company – New York-based investment bank
  • UNX, Inc – New York-based agency brokerage (see User comments)
  • Instinet – New York-based agency brokerage
  • JNK Securities – New York-based institutional broker on the New York Stock Exchange
  • Kelly & Christensen – New York based institutional brokerage
  • BTIG – New York-based institutional brokerage
  • Pulse Trading – Boston-based agency brokerage
  • Soleil Securities – New York-based provider of equities research
  • Williams Trading – New York-based outsource trading service provider (see BST's Big Interview, February 2007 page 36)

Competitors

  • Reuters IM
  • Parlano
  • Jabber
  • Communicator, part of the Markit Group

    • Technology and architecture
    IMTRADER is a three-tier client/server application that integrates with the buy- and sell-side's network, compliance and FIX infrastructure, providing users with a number of communication functions and the ability to (instantly) convert IMs to FIX to support FIX-based trading. The application is developed in .NET and is used to transmit data/transactions over secure SSL (secure sockets layer, a cryptographic protocol providing a secure communication environment on the Internet) connections to the IMTRADER server.

    The IMTRADER server is developed in Java and hosts the application's business logic. It also provides connectivity to third-party systems. IMTRADER can be delivered as either a fully managed and hosted offering or as an in-house solution backed by a real-time support organisation.

    Usefulness to the buy side
    IMTRADER is designed specifically for communicating and trading in the financial markets. According to Pivot, it was developed for investment professionals, incorporating communications functionality for the trading environment on a secure network; it offers users the ability to aggregate ideas and liquidity from the sell-side, to share information across an internal network, and the ability to archive and access historical 'memories' of each interaction and past executions. Investment professionals who use AOL for instant messaging can connect to their brokers through IMTRADER – all they need is a broker 'Buddy ID'.

    User comments: Scott Harrison, chief executive, UNX
    Scott Harrison has been chief executive of UNX, an Agency brokerage in the throes of relocating from Burbank, CA to New York, for the past six months. According to Harrison, UNX has been an IMTRADER client for just under a year, although he adds that the relationship with Pivot Solutions is more of an alliance than a simple client-vendor arrangement. "We have given IMTRADER clients – all of their clients, not just our buy-side clients – access to our [equity] trading algorithm," Harrison explains. "They can do dark pool sweeps and specific market interactions; if you have a block order that you give to someone on a desk to work, you first probably want to see what kind of liquidity you can extract from the market – that is the kind of toolset we have added and it is the first set of tools that takes IMTRADER beyond just a communication system."

    As a pure communication tool used to support trading activities, Harrison says that IMTRADER has replaced the phone and fax system underpinning buy-side firms' relationship with their brokers. "In the old world you picked up the phone and called the guy, but when the US market started to apply its OATS [the NASD-introduced Order Audit Trail System] restrictions, where you had to record electronically when orders were received and how they were transferred, using a phone became difficult." Harrison explains that typically the person who used to place phone orders now simply IMs them to his broker's desk. "It is really just an electronic version of the standard block order to a desk, which is what we use IMTRADER for – we have a lot of buy-side clients who send orders this way to our agency trading desk."