OASYS Becomes a Certifiable Hit In Trade Communication

Clocking 2.5 million trade allocations per month, Thomson Financial ESG has firmly cemented itself in the buy-to-sell-side-trade-communication process. As more and more money managers have gotten online with trade-order-management systems in the past three years, more have been looking to OASYS as their primary network for communicating trade allocations to their brokers. No fewer than 50 institutions and 60 brokers have signed onto the service in the past year, brining the total number of firms to about 800.

Both investment managers and brokers are finding that they can significantly reduce operational costs and man-hours spent on directing the proper securities to the proper portfolios, while increasing the accuracy of the entire process.

"It definitely reduces operational costs," says Rodney Schmucker, second vice president, investment operations, at Conseco Capital Management. Conseco, which has been increasing its use of OASYS for both equities and fixed income since 1997 and 1998 respectively, estimated that it was saving close to $100,000 per year back in 1998. "That was at that trade volume, which has skyrocketed because of all the accounts we’ve brought on since then," Schmucker explains. "We probably went from spending four to six man-hours a day in sending trade allocations out by phone or fax to no time because it’s all automated."

Conseco transmits trade data directly from its order management systems directly through OASYS. On the equity side, it relies on Advent Software’s trading system, while its fixed-income shop uses a proprietary system. Both systems feed into a common data warehouse and then shoot trades out through OASYS.

On the sell side, Salomon Smith Barney has found that its clients, particularly its large institutions, have been demanding the firm use OASYS. "Our top-tier institutional clients want to come to us electronically, and we want them to come to us electronically," says Albert Roessler, director, equity operations capital markets at Salomon. Roessler estimates that about 75-80% of its Boston-based clients and 70-75% of his New York-based clients communicate via OASYS.

"OASYS is the most effective and efficient way for us to get allocations from customers, and give them back a confirmation on a block level, which means the bulk of the trade gets into all their sub-accounts and transports them into my system and books them with ease," Roessler details. "Without doing this, I would need a drove of people doing data-entry functions, which we wouldn’t have the time for, nor would it give us the accuracy that we have now."

For its part, Thomson ESG has dealt with the skyrocketing volume by deferring its larger clients to the OASYS Direct platform, which processes trade data in real time via a direct connection instead of on a mini-batch schedule. Dave Merrill, managing director of Thomson ESG, Americas, attributes the growing volume to the increasing number of buy-side firms using automated trade-order-management systems.

Beyond equities and fixed income--its core--ESG has been working with clients over the past four to five months to configure the system to handle directed trades, commission arrangements and step-outs. "Some of our clients are seeing 20% of their transactions traded like that, which adds complexity in terms of communicating it to the person it’s being stepped out to or who should be getting commission for that trade," Merrill says. "We’re working with clients to make sure that those transactions can be fully automated."

By Andrew Rafalaf