Boston-based buy-side front-office solution provider LatentZero (booth 3603) is gearing up for a new era of pre-trade compliance, announcing the release of Capstone Sentinel 5.0 at this year's SIA Technology Management Conference. Already purporting to have the fastest pre-trade compliance engine with its Sentinel product, LatentZero claims that version 5.0 runs twice as fast as its predecessor. The solution has been sped up to enable asset managers to handle the increasing volumes associated with today's trading environment, as well as the anticipated volume surge as a result of increased electronic trading due to Reg NMS, the vendor says.
"The initial numbers are showing that we're meeting our objective, which was to be, essentially, twice as fast as before," reports Dan Watkins, cofounder and North American CEO of LatentZero. Watkins explains that the speed boost came largely by reengineering the way Capstone Sentinel utilizes memory to limit how frequently the product has to access a remote database. By installing a client application on the user's desktop, Capstone Sentinel 5.0 makes a single round-trip to and from the remote database, rather than having to fetch data at every command.
Gail Romano, director of North American operations, LatentZero, adds that in a post-Reg NMS world, the importance of speed in all processes, including pre-trade compliance, is essential as "milliseconds [determine] whether you get best execution or you don't."
Watkins echoes this sentiment. "With the buy-side trading desk and the volumes that they're doing increasing, the pressure for portfolio managers ... making investment decisions quickly is more important than ever," he says. Capstone Sentinel 5.0 has extended integration options by utilizing application programming interfaces on a Web services framework, according to LatentZero. The product can integrate with LatentZero's other front-office products or with proprietary systems. The Microsoft .NET user interface also has been upgraded in the new version.
As global regulations make markets move faster, compliance needs to become a part of trading as early in the trade life cycle as possible, Romano notes. "We're seeing a focus on pre-trade compliance and moving those checks as close to the decision-making process as possible," she asserts. Capstone Sentinel 5.0 incorporates 20 different preconfigured rule libraries covering all major regulatory bodies worldwide, Romano notes.
But getting the buy side to use Capstone Sentinel 5.0 as part of its order management system won't be easy. Watkins says that he considers Charles River Development's Charles River Compliance solution to be the main competitor to the Sentinel product.
Although many firms have noted the deficiencies of the products they use, they are often reluctant to make the switch, says Robert Iati, partner, TABB Group. "Probably the biggest issue is that order management systems have been fundamental for the trading desk for quite a long time, and I think what that's done is deepen the loyalty factor," explains Iati. "A very small percentage of them are willing to change because of culture issues. Essentially, it's the evil they know versus the evil they don't."
Capstone Sentinel 5.0 goes into live testing at the end of the month.