Pivot Points in a New Direction

BOSTON (HedgeWorld.com)—Known primarily for its IMTrader instant messaging, electronic trading and research distribution tool, Pivot Solutions Inc. is now positioning itself as a kind of "full package" provider—one that offers centralized trading, research, analysis, information and workflow management technology.

As part of this broadening of its focus, Pivot has expanded IMTrader and launched the enhanced product as Pivot 360°. The idea behind that move is to demonstrate that Pivot doesn't merely provide instant messaging and trading tools; Pivot 360° can be used to manage all information around a conversation or transaction. Specifically, Pivot wants to emphasize the idea of the product as a 360-degree "pivot point," collecting information from over here, organizing it, gathering more information from over there, sending it out to various recipients, gathering responses to the information that was sent out, churning out trade orders, managing those orders, measuring performance, and seeing the entire process through to completion.

This is an overly simplified explanation of what Pivot 360° does, but the only way to explain it comprehensively involves seeing it used live, or at least viewing some kind of slide presentation with graphics.

Pivot itself described Pivot 360° as "an inter-enterprise performance network." One way to think about it is as a point of contact linking people, in the form of traders, brokers, analysts and customers; content, including research, analytics, news and messages; and transaction data such as trade orders, confirmations and feedback. Pivot 360° allows users to personalize how they receive and sort information based on the topic and also to filter information. It can tag and structure pre-formatted content based on symbols, making sending out and gathering information easier. It integrates third-party research and distributes it automatically and to a targeted audience. And through its recognition of Financial Information eXchange Protocol, or FIX, it can convert IM conversations into automatic trades.

It will not cook you breakfast; not yet, at any rate. But Pivot 360° is designed to improve performance, said the firm's Chairman and Chief Executive, Lou Eccleston.

"Everything we do is not just about a conversation, but about driving customers' performance," he said. "Every application, every function, everything we do, we're asking our clients, ‘How does it impact your performance?'"

IMTrader's expansion gained steam after Mr. Eccleston joined Pivot in April. Last year, Pivot expanded IMTrader's functionality to allow it to start sweeping so-called dark pools of liquidity, or off-exchange liquidity, based on trading algorithms. In January, Pivot announced it was partnering with agency brokerage firm UNX to provide access to more dark liquidity pools . Mr. Eccleston said that when he arrived at Pivot, nearly all the pieces were there to develop a product with greater functionality than IMTrader alone. The result of putting all those pieces together, and building some new ones to bridge the gaps, is Pivot 360°.

Ed McDonnell, vice president and head of sales at Pivot, said, "Historically we've been in the market with a transaction-oriented solution; in other words, how can I manage conversations around the transaction and then enter into the transaction? What you're witnessing [with Pivot 360°] is the evolution of the company as we take that as our base and grow to be inclusive of everything around that transaction, not just the conversation, not just the chats."

Mr. McDonnell and the Pivot team have developed an illuminating web demonstration of Pivot 360°'s capabilities. At its heart the demonstration shows how one person can manage multiple conversations at once, filtering the incoming messages by relevance or by importance, disseminate research information to multiple but targeted clients and traders with a few clicks of the mouse, and monitor trade positions throughout the day. To try and describe it much more detail than that wouldn't do it justice. In its marketing materials, Pivot cites three case studies. The first is an "$8 billion asset manager," which Mr. McDonnell described as a hedge fund, suffered from "information overload." Thousands of messages and bits of information arrived every day. Unsorted, it was impossible to distinguish the information that required immediate action from that which could hold for days, or even weeks.

"The real problem was they had a group of front-office individuals—150 traders, portfolio managers and analysts—examining information and sharing it internally to make trades against different instruments, primarily cash equities," Mr. McDonnell said. "So how do they share internally and intelligently and manage counterparties on the outside, the 70 or so brokers?"

Mr. McDonnell described how Pivot 360° allowed the hedge fund to sort advertisements of liquidity, consolidate market color in one place and give traders a clear view of requests from portfolio managers and analysts. The program also allowed filtering of the messages so that the most relevant orders, information and market color were easy to see.

"The portfolio managers and analysts share information with the trade desk, and ask for information from the trade desk," he said. "Then we create two ‘pivot points' to go external, one gets fed market color from the brokers, one is for IOI's (indications of interest). That gets shared across 15 to 20 traders at any given moment, geographically dispersed to different locations around the country. Then they can act. It's a seamless way for the hedge fund to share information internally, manage 70 different brokers, and feed that back to the internal front office to create better decision making."

Two other Pivot case studies covered a broker worried that its market information, trade ideas and liquidity opportunities were getting lost in the global shuffle of information and an algorithmic trading provider looking to offer easy access to its dark liquidity pools without forcing customers to download some kind of front-end tool or set up FIX integration.

Pivot 360° allowed the broker to set up specific, searchable channels that were "mapped" to sector-based product lines. This allowed the broker to target information to traders, analysts and salespeople around the world based on their interests, ensuring the information they got was relevant. The algorithmic trading provider used Pivot and an AOL Instant Messenger screen name to provide direct FIX protocol-ready channels to traders looking to search dark pools.

Mr. Eccleston said Pivot 360° solves a dilemma facing many institutions: the inability to use consumer products to communicate and manage information both internally and firm-to-firm. "Think about what has to be done to satisfy the firm-to-firm piece," he said. "You need capital markets expertise, trade initiation, different functionality from chat rooms and basic collaboration features you have internally. Customers are trying to use consumer products, straight AOL, enterprise solutions, or trying to build their own. The tough part is satisfying the external piece, trading and sales. Look at what we built, we can do both. We've got customers that are using us as an enterprise solution internally and using us externally. We don't know anyone else who's doing that."