As Beta Tests Of Traderoute Commence, ESI Is On Board, But Turner Investment Isn't

THREE weeks ago, Thomson Financial Services Inc. began beta tests of its planned Traderoute order-routing service. However, at least one of the buy-side firms Thomson had slated for participation in the beta tests has put its plans on hold: Turner Investment Partners had expected to begin testing the service early this month, but has now pushed back those tests until month's end. Other participants, including ESI Securities Co., are proceeding with their beta tests. Thomson officials say the vendor expects to involve between four and six firms in the beta-testing; they decline to be more specific.

Traderoute, along with its order-tacking companion system Tradeview, is a key element in Thomson's strategy to unify its effort to corral the order-flow market (IMT, Dec. 16, 1993). Traderoute was initially scheduled to begin beta tests in the second half of 1993 (IMT, April 16, 1993). A year after Thomson announced the service, however, the vendor is only just beginning the process--and the system's launch is still not expected until early summer. Thomson expects to make a series of announcements concerning Traderoute in June, officials there say.

According to Clifford Titus, a managing director at ESI, the beta tests involve the passing of simulated order flow and execution messages among buy-side firms and brokerage houses. "At this point it is just fundamental order-routing," says Titus. ESI is a New York-based institutional brokerage, formerly known as Execution Services Inc.

Salomon Brothers Inc. has also been closely involved with Thomson's Traderoute advisory committee, a fact that makes it a likely sell-side candidate for the beta-testing program. Details of Salomon's involvement could not be determined at press time.

ESI has been performing both system testing and beta-testing of the Traderoute platform, Titus says. He says that he feels the tests are "about halfway through," but declines to specify when he expects the broker to complete the tests. According to Titus, ESI has not set a live a date for the service, nor has it decided as to whether it plans to go live with the service at the end of the testing period.

Still, he is optimistic about the successful completion of the beta tests. "It's going well," he says. "End to end, the whole system connection with the Thomson product is going quite well."

Meanwhile, Berwyn Park, Pa.-based Turner Investment appears to be in no hurry to get its Traderoute betas going. Early in February, the firm confirmed its intent to beta test Traderoute starting two weeks ago (IMT, Feb. 18). However, according to Turner head equity portfolio manager Chris McHugh--who is responsible for the project there and sits on Thomson's Traderoute advisory board--the firm has delayed the tests because it had "some other issues to take care of first."

McHugh declines to specify what these issues were, but adds that they were internal and not related to the firm's relationship with Thomson.

McHugh says that he plans to meet with Thomson vice president Carole Springer later this month in order to "revisit" some of the firm's objectives in taking part in the tests. However, he says, despite the delay, Turner is still interested in testing the Traderoute service.

"We still want to bring it in here and see what it can do," he says. "It's just that with all the other things we have had to take care of, we most likely won't be able to devote the time to it until the end of the month."

Traderoute runs on Microsoft Corp. Windows-based PCs or Unix workstations, and is supported by a Unix server running Sybase Inc.'s relational database management system. In its beta configuration, Traderoute uses X.25 protocols to send orders over Thomson's private network. The vendor has also developed a TCP/IP interface to link devices which make use of that protocol (Wall Street Network News, March 11).

The imminent entry of Tradeview and Traderoute into their beta-test cycles follows the debut of Thomson's so-called Electronic Settlements Group (IMT, Feb. 4) The ESG is meant to coordinate Thomson's effort to unite the sales, marketing and development operations supporting its settlement and execution systems.

Though Traderoute and Tradeview are managed by Thomson's so-called Trading Support Group--of which Springer is general manager--they nonetheless represent an important component of the ESG strategy, Thomson officials say.