Blue System Readies ASP Foray

LONDON--Blue System, a London-based provider of derivatives trading software and trading arcades, is readying a hosted exchange connectivity and software distribution service for the end of the year.

The new service will provide improved connectivity and backup for users, and give the company more control over its connectivity services.

Exploiting an application service provider (ASP) model, Blue will use new exchange gateway servers hosted by Colt Telecom. The servers will be based in its two greater London data centers rather than at the firm’s clearing partner, ADM Investor Services.

Blue currently uses ADM’s infrastructure for exchange connectivity and order routing to provide links to Liffe, Eurex, the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME). Blue’s software could also be used for seven other destinations, including Euronext, the International Petroleum Exchange, and the Sydney Futures Exchange.

ADM also provides similar services for a handful of other clients, officials say. Blue System clients, who now connect to ADM’s data center via the Internet, will eventually be able to connect to Blue’s data center via local Colt hubs.

However, the ASP service will not be ready until ADM has contacted participating exchanges and ordered additional exchange gateway servers, says Blue CEO Sulim Malook. Once ADM has made the arrangements, it will take two months to implement and another two weeks to test the system, Malook says.

Colt, selected from a group of four possible vendors, will also provide fiber-optic and Internet connectivity throughout Europe. The other contenders were only offering Internet connectivity. Colt provides all European telecom networking among the offices of Blue System’s facilities partner, Regus. Colt is also Blue’s existing networking services partner.

Malook says the switch to Colt from Internet connectivity will result in better links, resiliency and backup, as well as access to unlimited bandwidth for Blue’s clients. The switch would also replace the need to use ADM’s infrastructure--though ADM would still provide back-office functions and clearing services.

ADM will support any ASP move by Blue System, and will arrange for gateway server installations at Blue’s data centers, ADM officials say. In addition, ADM will still provide the required exchange memberships. ADM will have terminal access to the servers from its offices, and will receive clearing data directly from exchanges. The ASP arrangement will allow Blue to have more control over the services for its clients, ADM officials say.

The software that Blue System provides--to institutional clients and day traders--is a branded version of Future Dynamics’ Crossfire product. Blue System bought Crossfire in 2001 under perpetual license, which allows the firm to develop and redistribute the software. But unlike Future Dynamics and other vendors, Blue System distributes the software for free to attract business. Blue System offers installed and Web-based versions of the software, plus its own integrated analytics module using data from S&P Comstock.