Trading systems are being outfitted with risk and compliance features, as well as connectivity, as market participants adapt to the new realities brought on by regulations and a global marketplace for products and services.
That’s the key motivator behind the acquisition by Mantara, a provider of advanced ultra-low latency trading solutions, of UNX, a supplier of innovative broker-neutral execution management system (EMS) technology.
The combination will enable high-frequency traders to benefit from access to an open and flexible EMS coupled with Mantara’s flagship pre-trade risk functionality and ultra-low latency direct market access.
“With the UNX acquisition, we can bring to market the first EMS that’s integrated with an ultra low-latency back end” said Michael Chin, president and chief executive of Mantara.
“From a Mantara product perspective, the vision was to grow out our functionality from being a risk management GUI [graphical user interface] to becoming an EMS in itself,” added Chin.
It’s no longer enough for an execution management system to simply source liquidity using algorithms and to facilitate high-frequency trading. They must also be capable of conducting elaborate pre- and post-trade risk management functions.
“Market participants are seeking out solutions which leverage the entire community expertise,” said J. Michael Hopkins, president of securities processing (U.S.), fixed income and risk, at Broadridge Financial Solutions, a provider of investor communications. “They are seeking solutions which leverage large cross-sections of industry expertise.”
UNX’s Catalyst is an open, broker-neutral EMS that links to UNX’s the Marketplace, which hosts diversified products and services from third-party vendors, information providers, exchanges, alternative trading systems and broker-dealers.
The Marketplace offers instant access to free, paid and trial-version apps from broker-dealers, trading firms, exchanges and software companies, where industry professionals can shop for brokerage solutions such as algorithms, order routing and analytics from various brokerages and investment banks around the world.
“The Marketplace reflects the apps store distribution and access model as applied to financial services,” said Chin at Mantara. “It’s probably the most important part of the acquisition.”
The Marketplace represents a departure from the traditional trading technology business model in that UNX encourages outside developers to build applications on Catalyst using the UNX Software Development Kit.
These include advanced trading analytics from a host of leading providers including QSG and Titan Trading Analytic, investment research and recommendations provided by Zacks Research and UNX’s own Catalyst Execution Management System for portfolio, single-stock and options trading, and international order routing.
Once applications are ready for deployment, they can be distributed and accessed through the Marketplace.