Liquidnet Pilots New Analytics Platforms After Acquisitions

Liquidnet is working on pilot projects with portfolio managers and traders as part of efforts to expand its data analytics offerings to institutional asset managers.

The projects are products of a new business unit at Liquidnet called Investment Analytics, which combines the trading network provider’s last three acquisitions: buy-side analytics platform provider OTAS Technologies (2017), natural language processing (NLP) specialist Prattle (2019), and research aggregator RSRCHXchange (2019).

The Investment Analytics business is running two pilots. The first is for equities traders and delivers pre- and intra-trade advanced analytics and alerts. This product can integrate with its clients’ trading blotters, and the system knows at any point in time what the core focus for that client is, ensuring that the client only receives data relevant to the stocks the client is looking at.

Integrating clients’ trading blotters with Liquidnet’s systems has been fundamental to its business model for years. Now the company is taking that integration and extending its use from finding matching or block-crossing opportunities, to delivering curated analytics and insights, says Simon Maughan, recently appointed head of trading alpha at Liquidnet.

“Filtering is a significant part of efficient delivery of data,” he says. “Asset managers are being inundated with new datasets, and technology providers should do a better job at selecting the ones that have the highest value for a particular trader and providing them at a time when they could be of greatest use. During this pilot, we really focused on developing capabilities that help to determine when certain types of information are going to be important in our traders’ workflow, and making sure that information is pushed out to them, rather than them having to pull it.”   

The acquisition of OTAS was the first step to solving that problem.

“Following the OTAS acquisition three years ago, we started to work on solutions that sit in the middle of the investment process—whether in fixed income or equities, portfolio management or trading—and to develop what we call the global investment network, which is going to use analytics to respond to the evolving [and] increasingly-automated role of the trader, and enhance trading workflows,” Maughan says.

For the other pilot, Liquidnet is working with portfolio managers on a web-based app that provides a suite of data services. The app will take in signals from traditional market data and alt data providers and combine those with Prattle’s NLP expertise to derive unique insights.

“That is being refined by a different pilot group,” Maughan says. “There is some natural overlap [with the other pilot]. It is the perfect solution for us to have portfolio managers using our portfolio management platform and the traders who work with those portfolio managers to use our trading platform.”

Maughan, who was previously COO at OTAS before its acquisition by Liquidnet, did not provide an estimated go-live date for these projects.

“We are working with the pilot members to test the pilot for both portfolio managers and traders, and to refine the product to a level where it’s ready for broader release,” he says. “…We have incorporated powerful components from all three of those [acquisitions] with Liquidnet’s existing technology and network to form our Investment Analytics business.”

On top of those two pilots, the firm is also eyeing the commercialization of other analytics packages for the buy side. In the first phase of integrating OTAS, aspects of its analytics function were integrated into the Liquidnet equities desktop trading application, and made available in 2018. Liquidnet recently completed the second phase of integration, which involved enriching the content further and making changes to the workflow.

“We have pilots running with our existing trading members,” Maughan says, “but also with new firms on the portfolio management side in order to refine and perfect these analytics for commercial launch at a later date.”