Xigo Introduces Real-Time Filtering Service for Buy and Sell Side

SAN FRANCISCO--Xigo, an ASP and technology provider, has developed an agent-based technology platform that filters streaming financial feeds in real time. The platform is being marketed to broker/dealers, investment managers and other financial services companies.

The platform is based on what the company calls dynamic intelligence and includes a real-time, agent-based search engine, a news search algorithm and priority-ranking technology, semi-structured and unstructured text parsing and text classification.

The technology ranks content by how likely it is to affect stock prices, and then it filters for relevance to a user's portfolio. The service also offers backtesting of trading strategies. It sends alerts--dubbed Xigobots--to users via e-mail and wireless devices. Content is drawn from a number of data feeds, including Barra, Bridge, Businesswire, Fame, Multex and PR Newswire. The platform examines news and event briefs, technical alerts and compliance briefs.

The technology is "feed-agnostic," says Lenny Raymond, chief spackling officer, acting COO and co-founder. "[The feed] can be integrated on top of the system without changing the architecture."

The company is offering retail and institutional versions of the platform. The institutional version has more sophisticated analytics, content and capabilities. "Institutional customers will want more sophisticated, customized analytics and also extra customization," Raymond says.

The platform comes in two flavors: HTML and XML. Both can be customized, but the XML version provides more flexibility and personalization. Both are provided on an ASP basis. Raymond says firms have expressed interest in a true ASP model in which the service is hosted from one of Xigo's data centers. Xigo can also provide co-location with one of the firm's data centers for large companies, but Raymond says that is not as cost effective.

The software is Java-based with the Oracle 8i database. Digital Island provides primary hosting in Los Angeles with a backup facility in San Francisco. According to Raymond, Xigo is using elements of FIXML and NewsML as well as its own customized XML syntax.

Pricing for the retail service is based on usage with monthly minimums. There are also upfront integration fees. Raymond says Xigo is only interested in direct relationships with retail brokerages that will generate "a couple million a year." The institutional pricing structure is still undetermined.

Xigo is looking to work with the top 35 or 40 brokerages and some banks, Raymond says. He says it does not make sense economically to have direct relationships with other institutions. Instead, Xigo will provide its technology through channel partners.

Those deals are already in the works. Under a recent deal with W-Technologies, formerly known as W-Trade, Xigo's technology will be available over W-Technologies' wireless platform. The technology is also being integrated into Bridge and Tibco feeds. Xigo plans to partner with other market data vendors and integrate their textual analysis technology.

Xigo was originally created to develop a program trading system for equities, and the platform is still exclusively common equities. However, there are plans to extend it internationally and add related asset classes such as options and eventually other instruments. Although the program trading effort never came to fruition, the current product is still based on that underlying technology, and the company plans to eventually add automatic trade execution.

Investors in Xigo include John McKinley, Merrill Lynch's CTO, but Merrill Lynch itself is neither a partner nor a client. Raymond says the vendor is in late-stage talks with several brokerages, but declines to give details.