The Company: This European fund, part of a large investment management group, has a stellar 8-year track record managing its flagship long/short European equity fund. The group has invested in building a high quality infrastructure which includes internal Risk Management, Compliance, Finance, Operations and Administration functions and a proprietary portfolio management, trading and risk management system. The fund has 24 employees, including a group of 11 seasoned investment advisors, and has offices in London, Hamilton (Bermuda) and Lugano (Switzerland).

Marketcetera products used:

• Marketcetera Automated Trading Platform
  • Strategy Studio
  • Strategy Execution Engine
  • Order Routing Server
  • Market Data Adapters and Certified Broker Connections

Business Challenge: Find a cost-effective trading solution to enable IT staff to focus on revenue-generating development projects as opposed to general infrastructure maintenance and development.

Solution Benefits:

• Flexible system allows the fund to modify platform to meet its needs
• Open source solution highly cost-effective
• Open source community provides rapid, effective response to challenges that arise and facilitates feature development
• Easy to use system frees developers to focus on other things

THE CHALLENGE

Since 2004, the fund had developed and maintained its own custom trading system, providing real-time risk monitoring and analysis of portfolios plus an end of day suite of reports covering risk, position and P&L. Though the system worked well for the fund, the company found that development times were too long and infrastructure and maintenance costs were too high. The fund wanted to find a more lithe solution that would enable the staff to focus more effectively on its investment strategies, rather than on the supporting IT systems.

THE SOLUTION

In its search for a flexible, extensible core for its trading system architecture, the technologists at the fund downloaded and evaluated Marketcetera’s Automated Trading Platform in addition to evaluating other proprietary systems. The fund quickly found that the other solutions were expensive, lacked a flexible UI, did not provide sufficient support and were paid by commission, which for a firm involved in high-frequency trading could result in prohibitively high fees.

Traders at the fund liked that Marketcetera was easy to use, yet technically flexible. Feeling that the platform would provide an ideal base for its trading activities, the fund moved its entire order management system to Marketcetera. The system has been in production since late 2007.

Senior managers at the fund particularly appreciated that its IT staff could directly modify the code to suit the needs of the trader. Though single instance multi-broker support was not available with the Marketcetera community product at that time, the fund’s IT staff built that functionality into the installation. This feature development, and subsequent feedback to the community, helped Marketcetera shape later versions of the core product and Marketcetera now offers single-instance multi broker in the core download, allowing customers to look at all trades across all brokers at once. In keeping with its desire to reduce ongoing maintenance responsibilities, the fund now uses the community version of Marketcetera community.

THE BENEFITS

Liberated from the day-to-day maintenance of core system functionality, the fund now relies on the Marketcetera community product for its basic infrastructure. This refocusing of resources has enabled IT to concentrate on development projects that directly affect the success of the fund.

Using Marketcetera, the fund has cut down development times significantly. Whereas the previous system took more than six years to build, IT staff at the fund completely rebuilt the system using Marketcetera in about a month. Ongoing feature developments and modifications take even less time and are normally finished in just weeks.

Both the technologist and the traders at the fund had no hesitation about using an open source product, knowing they could get the system they wanted through open source, either directly from the community download, or by modifications they made to the base system. Using proprietary solutions would have been much more difficult to implement, less flexible and cost much more than the Marketcetera solution. The fund also values the availability of knowledgeable, timely support through the Marketcetera community forums, should they need it.

THE FUTURE

The fund has adopted Marketcetera Automated Trading Platform as the basis of its trading system, and plans to expand the system over time. The fund’s openness to using open source software, technical acumen, and ongoing community participation have resulted in a mutually beneficial relationship, providing them with the product and features it needs, and Marketcetera with significant customer insights and contributions.