The U.S. equity market is ripe with vendors and solutions to almost every conceivable trading problem.
But how does a firm with overseas chutzpah make it here in the U.S.?
In a conversation with Traders Magazine, TORA’s Chief Executive Officer Robert Dykes discusses his strategy for building his business here and how his firm lowers the total cost of ownership (TCO) for his order and execution management system (EMS) technology.
Traders Magazine: TORA is a well-known EMS player in Asia but less so here in the US. What is the strategy for building out your business here?
Robert Dykes: TORA has been in the EMS space for the last 13 years, and as you mention our focus for most of that time was on Asia where we’ve grown to become one of the top providers in the space. We decided a few years ago that the timing was right for our business to expand globally, but to break into mature markets such as North America and Europe we knew we’d need a truly differentiated product.
That’s why we’ve spent the last couple of years building our own full featured OMS to sit on top of our existing EMS, which makes us one of the very few firms in the industry to have a truly integrated, organically developed OEMS system rather than a stitched together hodgepodge of separate systems. With that in place, we’ve been working to build out the team over the last six months – adding senior sales, business development and support staff in the US and Europe – and now working on our ground game to put the strategy into action.
TM: How is that working out? That sounds like the pitch several of the OMS and EMS vendors give?
Dykes: I don’t disagree that people have been selling the idea of an OEMS for many years now, but ask most any buy sider and they will tell you that’s it’s almost entirely marketing hype. Combining systems through mergers and acquisitions is incredibly hard, and invariably what happens is that the “integration” is largely cosmetic and non-existent on the back end, which leads to clunky performance, heavy infrastructure requirements and duplicative costs. We in many ways benefited from a second mover advantage, which allowed us to develop a superior product from the ground up, at a much lower total cost of ownership to clients than the vast majority of our peers.
TM: Total Cost of Ownership (TCO) is an issue that we hear more and more about, with firms approaching it from different angles. How are you going about helping the buy side reduce it?
Dykes: Well, one of the biggest issues we see is that many funds have been oversold product, so they end up using a small fraction of the functionality that they’re paying for. We tell people all the time that we can provide the exact functionality they are utilizing with their current OMS/EMS provider at a fraction of the cost, which is obviously a message that many firms are receptive to these days given the cost pressures they are under.
We provide every piece of the OEMS solution -- hardware, software, hosting, integration, maintenance and connectivity – which is not only far less expensive than the legacy deployment models still pushed by many vendors, but it also allows clients to focus on their own business and not on vendor management.
TM: What is the buy side asking of you primarily?
Dykes: Aside from ways to help them lower their TCO, the biggest thing the buy side is looking for is help with their growing compliance demands – that’s true of our clients globally. Whether it’s the big issues like MiFID II compliance that everyone is talking about or less talked about challenges like changes to settlement times or short sale requirements or collateral rules, the buy side simply cannot afford to be out of compliance.
And that means having vendor partners who are nimble enough to support their unique and evolving workflows. Our development team includes over 160+ software engineers, which, when combined with our cloud-based model, lets us seamlessly push out frequent enhancements based on our clients’ demands. The majority of these are relatively small changes that don’t result in press releases, but the ability to respond quickly and efficiently to our clients’ workflow needs is a huge point of pride for us and ultimately what is helping us to grow.
TM: What do the next 12 month hold for TORA?
Dykes: On the product side, we have several significant enhancements in queue around our middle-office and pairs trading functionality. We are also very excited about the new Strategy Server that we’re testing with several clients now. Fund managers are increasingly calling for a greater degree of control over their trading strategies, and that’s exactly what this does, allowing buy-side traders to overlay the broker algos available through TORA with standardized and normalized controls for a number of different parameters.
And on the business side, I think you’ll see us continue to expand. Our push into the US and Europe has begun to pay dividends, and we’re planning to continue staffing up in those regions to support that growth.
