Fresh off the rollout of PowerNet, its new order-delivery and quote-aggregation system, SunGard Trading Systems/Brass will emphasize its push into the listed-equity markets at this year's SIA Technology Management Conference and Exhibit show. Through its flagship Brass network, SunGard has long been known as the largest order-management-system (OMS) vendor for Nasdaq stocks. But recently, through the release of PowerNet and through new smart-routing functionality added to Brass, SunGard has made a significant push to grab a foothold in the New York Stock Exchange/American Stock Exchange realm.
PowerNet, launched in March, enables SunGard customers to see the full depth of the limit-order books of six ECNs: Island, Instinet, Arhchipelago/Redibook, MarketXT, Track and Brut (which lists SunGard's parent as an owner). Users of PowerNet can not only see full depth of book, but also route orders directly to ECNs based on the quotes they display on SunGard's network. Eventually, SunGard expects to provide similar access and order-routing capabilities for roughly 40 market makers that have agreed to display their stock prices on PowerNet.
In the future, PowerNet is also expected to provide users with access to the liquidity of the alternative-display facility (ADF), a quote display and trade-reporting facility that is currently being developed by the National Association of Securities Dealers. The NASD is building the ADF as an alternative for ECNs that do not want to post their quotes on SuperMontage, Nasdaq's new order-routing and execution network. To date, a total of zero ECNs have indicated an interest in displaying their Nasdaq quotes on the ADF. However, Island, the largest ECN, has publicly stated its desire to post its listed quotes on the ADF.
Tom King, president and chief operating officer of SunGard Trading Systems/Brass, says that PowerNet is in excellent position to act as an order router for ADF quotes, because the ADF -- scheduled to go live by the end of June -- will not have any internal order-routing capability. "We think PowerNet fits in perfectly there. Right now, (the ADF) doesn't really have linkages to the marketplace, so PowerNet is a natural fit," he says.Providing order routing to listed quotes posted on the ADF could help boost SunGard's NYSE/Amex business. But King says that, through electronic connectivity it has built to the New York Stock Exchange's Broker Booth Support System, SunGard has already increased its listed business by 75 percent over the last "six to nine" months.
King declines to provide specific listed-volume figures for SunGard, but says that the vendor significantly improved its standing by building a smart-routing interface between Brass and the BBSS. "We also have (built) an allocation system for listed stocks ... (and) have added sophisticated capabilities for working a listed order (through Brass)," he says.
Through Brass' smart-routing component, King notes, clients can also electronically send orders to Nasdaq, Nasdaq Europe, the London Stock Exchange, Euronext, Jasdaq (Nasdaq Japan), the Deutsche Borse and a plethora of regional stock exchanges.
In addition to showing off its listed functionality, SunGard plans to demonstrate the ability of its systems to interact with SuperMontage, which will display the five best bids and offers for each stock Nasdaq trades. King says that the rollout of SuperMontage should be a net positive for both Brass and PowerNet.
"Customers can route more than one order now. Whereas before they could only have one row in (Nasdaq's) montage, now they can have multiple rows. So you have to have a little more sophistication on the order-management side," he explains. " I also think that (post-SuperMontage), there is going to continue to be fragmentation in the marketplace and (Nasdaq participants) are going to need to have a consolidator and an aggregator, and that's what (PowerNet) is all about."
SuperMontage, he says, should bring significant change to the Nasdaq market, forcing OMS vendors and ECNs to be more innovative. However, he does not think that SuperMontage will eventually eradicate ECNs, which now collectively account for roughly 37 percent of Nasdaq's total volume. "They have the liquidity, and a lot of their orders are done in their book and never even get to Nasdaq in the first place. So as long as there is liquidity there, they're going to survive," King predicts.