Smith New Court Selects Colt For Position-Keeping

London-based market-maker Smith New Court PLC is installing Software Sciences Ltd.'s Continuous On-Line Trading International system to complement the information delivery system it introduced last year.

Smith New Court, the U.K.'s second-largest market-maker, plans to install COLT International at 350-400 dealer positions. Delivery will take place in two phases, starting with U.K. equities operations and followed by the firm's international trading room. The system will replace manual trading methods in both operations.

For the U.K. equities operations, Software Sciences, a subsidiary of Thorn EMI, customized COLT International to facilitate 90-second reporting of trades to the International (London) Stock Exchange. The system will also feature an interface to the SEAQ Automated Execution Facility, the ISE's new small order execution system. Once the initial implementation phase is complete, Software Sciences will deliver the system for dealing in international equities, expected in late summer.

COLT International will be based on IBM PS/2 workstations, connected via local area network to a Stratus XA 2000 Model 130 computer. The two dealing rooms also will interface with Smith New Court's custom-built settlements system, which utilizes Digital Equipment Corp. VAX computers.

The system will sit side-by-side with the dealing system based on IBM AT equivalent workstations that Smith New Court had custom-made to handle its U.K. equities operations in London. Smith New Court, which had hoped to market the original system to other securities firms, decided against selling it last autumn despite interest from PaineWebber Inc. and Shearson Lehman Hutton Inc.

It now has 75 dealer positions using the system for information distribution to its market-making operations in both U.K. and international equities, according to Andrew Stewart, information technology coordinator at Smith New Court.

Smith New Court began development on that system in 1986, when it ported its own version of UNIX onto workstations that were custom-built to fit the trading room. The firm based the workstations on Intel 80286 microprocessors, but left open the possibility of upgrading them to 80386s once those chips became available. The workstations were linked via Sun Microsystems Inc.'s Network File System.

The system featured a home-grown enhanced graphics adaptor, which allowed connection of four color monitors running Smith New Court's own screen manager and windowing system.

Smith New Court also developed its own fourth generation languages and its own screen builder, giving traders access to custom fonts and a range of colors. The system used a Pyramid minicomputer as an application server. While many of these features are now commercially available, they were not when Smith New Court started development three years ago. The firm spent two-and-a-half years on the project, allocating as many as 30 people to it at times. Estimates of the cost of the system range from six million pounds sterling to 12 million pounds. The COLT International order adds one million pounds to the total cost.

COLT International is a position-keeping system that Software Sciences jointly owns with Boston, Mass.-based Femcon Associates. It is installed at seven other sites in London: Barclays de Zoete Wedd, County NatWest, Cazenove & Co., James Capel & Co., Kleinwort Benson, SBCI Savory Milln and Salomon Brothers International.

The system captures deals, either automatically or by traders, and feeds transaction details to back-office systems and external regulatory bodies. It provides multi-currency position-keeping in a range of instruments and uses real-time data feeds to give continuous mark-to-market valuation and profit/loss calculations. It also disseminates internal price information both within the firm and to outside vendors.