Open Technology Helps UNX Build Out Its EMS

Agency broker integrates Credit Suisse and other broker algos and electronic trading tools into its Catalyst execution management system and looks to expand into multiple asset classes.

By Ivy Schmerken ischmerken@techweb.com

UNX continues to build out its Catalyst broker-neutral execution management system and portal. After announcing recent enhancements to the portfolio and single-stock trading capabilities of the Catalyst EMS, as well as the integration of broker algorithms, portfolio trading and other electronic trading services into the EMS and electronic trading portal, UNX secured a new round of financing in May to support, in part, the agency broker's expansion into multi-assetclass trading. Then, in June, UNX added to the Catalyst platform access to Credit Suisse's equity algorithms and electronic trading services.

The latest injection of capital, which follows a round of financing last year, includes investments from Broadhaven Capital Partners and Matthew Pritzker Co., which join existing investors Goldman Sachs, UBS Investment Bank and Vernon & Park Capital, according to a release. "We did another [round of financing] to cope with the growth that we've been facing and the need to accelerate some of the build outs that we've been doing," explains UNX CEO Thomas Kim, adding that the firm will use the funding to develop electronic trading functionality for options and futures and to extend its order routing and trading network into Europe.

"We are eager to build out multi-asset classes in the Catalyst portal and offer access to global markets," he relates. But Kim, who joined UNX in late 2009 and previously built out EMSs at Townsend Analytics with RealTick and at TradingScreen, says Catalyst's open technology framework sets it apart from other execution management systems in the marketplace. "The market doesn't need another EMS provider. The market is looking for open solutions that they can ... build into their own solutions and needs," he asserts, adding, "The existing model is broken." According to Kim, hedge funds and traditional asset managers looking for technology solutions often put their faith in a single vendor, even
though the solution may meet only 70 percent of their needs. In turn, he contends, the vendor uses the leverage created by this vendor lock-in to dictate future directions to clients.

Don't Settle for Anything Less
Rather than forcing clients to commit to one vendor's solution, however, Catalyst is an open platform that includes an EMS, smart order routing and the UNX Marketplace, which offers customers tools and services built into the platform by exchanges, brokers and vendors, according to Kim. "From UNX's perspective, you don't have to settle," he says, noting that Catalyst offers a .NET framework and open software development kit (SDK). "I'll give you the platform and the tools for you to integrate whatever you want."

Within the UNX Marketplace, for example, a buy-side customer using Catalyst can pool combinations of different tools that fit its needs, Kim says, adding that he envisions brokers adding tools such as research, transaction cost analysis (TCA) and prime brokerage services along with value-added content. "It is limitless what people can integrate into Catalyst," he insists.

In fact, brokers and vendors already are building tools into the portal. In addition to the Credit Suisse equity algorithms and electronic trading services, other recent broker-dealer integrations include offerings from Girard Securities, Goldman Sachs, Knight, Mizuho Securities USA, Rosenblatt
Securities and UBS Investment Bank, Kim reports, noting that UNX's network also sends order flow to brokers' EMSs. Further, he suggests, exchanges lack a front end for many of the new tools they are launching, so they could be contenders to integrate with Catalyst as well.

"We are pleased with the speed and ease of the entire deployment process using Catalyst's revolutionary open technology and look forward to harnessing the UNX SDK to increase our breadth of content and offerings," stated Guy Cirillo, a Credit Suisse spokesperson, in a release. Users of Catalyst now can submit orders to Credit Suisse's internal crossing network, Crossfinder, the No.1 alternative trading system (ATS) in the U.S. by volume matched. Clients can send orders to Crossfinder directly or through any trading strategy offered by Credit Suisse's Advanced Execution Services (AES).

"Now that they're onboard, our plug-and-play technology gives them the ability to add additional content and updates whenever they want," UNX's Kim added in the release. And while vendors typically charge brokers a fee to include the brokers' offerings in the vendors' EMSs, with Catalyst, the broker handles the integration itself so there is no additional charge, Kim tells Advanced Trading. Another benefit, he adds, is that the broker, exchange or vendor can control who has access to their tools, so UNX is not in the middle.

In terms of developing multi-asset-trading capabilities, Kim says, UNX is open to collaborating with other options EMSs or even to integrating another options EMS directly into Catalyst. "If there isn't a suitable options solution through other vendors, we are open to building it ourselves, but our first objective is to collaborate," comments Kim, who reports that UNX already has had conversations with options EMS providers. "Since the platform is so conducive to that sort of technical relationship, the options and futures vendors are coming to us."