AFTAs 2015: Best OTC Trading Initiative—Convergex

The ultimate result of streamlining requests for quotes (RFQs) means that a formerly manual process that could take upwards of five minutes to complete is halved.

convergex-otc
Michael Winberg, Muggsy Bogues, Ann Neidenbach, Bruce Ostrover

New York-based agency broker Convergex wins this year’s best over-the-counter (OTC) trading initiative, following past winners State Street (2013), Citi (2012) and JPMorgan in (2011). As transparency and best execution now play critical roles in OTC trading markets, it comes as something of a surprise that a solution that has not yet left its beta-testing stage would be able to triumph against more established competition in this category, although clearly the eight judges felt that Convergex’s ETF Direct platform has the potential to bring something new to an already mature marketplace.

The platform has been engineered from the ground up, through conception to development, and plays to its core strengths—the position of the company as an agency broker—enjoying a steady clip of client on-boarding since its soft launch in October of last year. 

ETF Direct is designed to streamline the historically manual process of requesting multiple quotes for illiquid, exchange-traded funds (ETF) from Convergex’s private network of market-makers and liquidity providers in order to find the best potential price available in the market. Following an initial request, the process passes through pre-defined orchestration, affirmation and confirmation periods, allowing all counterparties to participate equally. The winning market-maker is then notified before execution automatically occurs by way of the order entering the order management system (OMS) for transmission back to the client.

The ultimate result of streamlining requests for quotes (RFQs) means that a formerly manual process that could take upwards of five minutes to complete is halved, resulting in an elimination of market-move issues and operational risk, while increasing trader productivity for both clients and brokers. In addition to automating the RFQ process, ETF Direct provides users with a fully auditable trail to comply with transparency and best execution requirements, and keeps all participants anonymous.

“One of the things that we are doing on our side is keeping the clients and the market-makers anonymous so that the clients don’t feel like they are showing their hand or disclosing too much information when they’re looking for quotes,” explains Michael Winberg, senior vice president at Convergex. “From our side, we’re really working to ensure that the market-makers and the clients have a good experience on both ends.”

ETF Direct is due to be released to the wider market sometime during the first quarter of this year, while Convergex is already eyeing up further enhancements to the platform. Efficiency is a key element here with the firm looking to install sweep functionality. 

The platform has been engineered from the ground up, through conception to development, and plays to its core strengths—the position of the company as an agency broker—enjoying a steady clip of client on-boarding since its soft launch in October of last year.

 

 

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