The role of the introducing broker, which has been traditionally that of go-between for futures commission merchants and their customers, is being revamped as futures trading goes increasingly electronic and customers juggle multiple FCM relationships.
“This is 2014. Introducing brokers can't just put their heels on their desks and act as your traditional sales role,” Paul Geiger, chief information officer at Thales Trading Solutions, told Markets Media. “You have to have technology services. You have to have operational services.”
The business model of Thales Trading Solutions is to offer “a very customized boutique-like feel with our counterparties that have brokerage accounts with the major FCMs that we partner with,” he said.
Thales, which has invested heavily in technology since its creation in 2012, has entered into a multi-year agreement with Jefferies. The agreement will equip Jefferies with an advanced web-based application to support its client base in futures, options, and foreign exchange.
“The alliance with Thales brings our clients cutting edge technology while still maintaining our unique brand and customer-first business model,” said Patrice Blanc, Jefferies global head of futures, in a release.
Jefferies is a relatively new participant in futures and options. In 2011, it acquired Prudential Bache’s commodities business. “What our technology lets them do is to start the game running, so that they don't have to build out a huge technology project from scratch on their own,” said Geiger. “Our solution is something that is very tightly wound and fits very well within their business model.”
A cornerstone of Thales’ business model is its client portal, which provides any-to-any connectivity between clients and FCMs. “Every FCM has their own client log-in, but it was important for us to develop our own log-in that collects information and aggregates it in a standardized format,” Geiger said. “Again, it being 2014, I'm sure you're aware of all the necessities for collecting data and getting it in a standard data model. We do not compete from a technology standpoint with the FCMs that we partner with. It's more of a complement.”
Clients wishing to use multiple FCMs need to be assured that that there will not be a loss in service level, reporting, or transparency. “Our reconciliation and matching engine can be used to match each manager’s trade capture systems with the actual bookings at the FCMs,” Geiger said. “We serve as a data hub to confidentially and securely store and send out reports or data files to investors, trading managers, administrators, and other providers as needed.”