Skyler Enters European Markets

The new product suite, which will be rolled out to several customers in mid-March, allows clients to aggregate fragmented liquidity in the U.S. and Europe to be viewed on one application programming interface (API), says Michael Lenahan, senior vice president for Skyler.

According to vendor officials, the enterprise enhancements to the liquidity discovery solution include more sophisticated scalability and high-availability mechanisms, as well as more architectural flexibility to deliver liquidity information to algorithmic engines and graphical user interface (GUI)-based users.

The suite also powers smart-order routing systems, trading algorithms and trading desktops by offering insight into market liquidity, officials add.

With liquidity more fragmented, brokers need to trade more efficiently to get better the prices, says Valerie Bannert-Thurner, managing director for Skyler Europe. "We deliver a system now that informs where the liquidity resides and we do it by aggregating liquidity information from different venues into what we call an order book," she says.

The expansion of the product to support European market feeds was driven by customers, according to Lenahan. Late last year, Skyler opened an office in London to support its customers in the region. Former vice president of business development Bannert-Thurner relocated to the U.K. late last September to spearhead the sales and partnerships activities in the new office (DWT, Oct. 15, 2007).

"In Europe, it's a slightly different market structure," Lenahan says. Through the updated Liquidity Discovery Solution, clients have the ability to aggregate books on similar instruments on the same settlement lines, independent of the venue, he adds.

"So the algorithm can access that liquidity and not cross over settlement lines, which can create a significant challenge for settling those trades," Lenahan explains.

According to him, the new European-related functions "didn't take long to develop." Skyler worked with a couple of different banks on the aggregated settlement lines view, Lenahan says, declining to name the customer banks.

Currently, the liquidity discovery product supports direct connections to data feeds such as Reuters Market Data System (RMDS) and Tervela. Several customers have requested a direct connect to Fidessa's feed and Skyler is working with them on that, says Lenahan.

Skyler is also looking to add the London Stock Exchange (LSE), Deutsche Börse, multilateral trading facilities (MTFs) Chi-X and Turquoise as well as the Bats ECN, he adds.

The Linux-based system does not have specific hardware requirements, according to Bannert-Thurner. "We run on everything-we have a lot of off-the-shelf adapters," she says.

For European markets, Skyler has expanded the flexibility of the system to allow customers the ability to request order books aggregated over a specific user-defined set of venues on a per-query basis. It also supports multiple currencies.

Although Skyler has been focusing on U.S. equities to date, the vendor plans to roll out support for multi-asset trading later this year, according to Lenahan. The firm is working with "a couple large customers who have been sponsoring the product development and rollout in Europe" on the asset-class expansion.

According to Tom Price, senior research analyst with research firm TowerGroup, the industry's next move will be into the foreign exchange (FX) markets. "Whenever markets fragment, there will always appear on the scene a better mouse trap," he adds.

Skyler also plans to add Asian markets support to its suite sometime this year, for a "truly multi-asset, global liquidity discovery solution," says Lenahan.

Aleri, a complex event processing (CEP) technologies provider, already brings in some Asian data, along with data from the U.S. and European markets. However, Aleri's vice president of product strategy Jeff Wootton hasn't seen much customer desire for an integrated U.S.-Europe order book on the same API. "So far, it's true that people seem to be either consolidating North American data or consolidating European data and not mixing the two," he says.