Barclays Global Investors Eyes Upgrade to BridgeActive1 Desktop for Fixed Income

Barclays Global Investors is working with Bridge Information Systems to upgrade its delivery platform for the Telerate feed to the new BridgeActive1 desktop by the third or fourth quarter of this year.

Barclays uses the Telerate feed to price index funds investing in U.S. bonds, as well as on its trading desk. Slated for completion at the end of the year, the move to BridgeActive1 is a sign that Barclays is reviewing its fixed- income infrastructure, which is used to price both its active and passively managed index funds. As many as 10 to 15 portfolio managers, traders and trade support staff will use the new BridgeActive1 desktop, a more open delivery platform.

At present, Barclays uses Bridge's EJV infrastructure as a delivery mechanism for receiving end-of-day files from Telerate, according to Craig Squires, director of U.S. applications for San Francisco-based Barclays Global Investors. Bridge acquired the EJV platform from EJV Partners-originally an effort by six of the top seven investment banks-to build a "Bloomberg Killer" in 1995. "We're moving away from the EJV product as a delivery mechanism," says Squires.

Today, Barclays picks up the end-of-day Telerate files from an FTP site. BridgeActive1 combines BridgeStation with the Active1 technology, which Bridge acquired when it purchased Telerate from Dow Jones Markets in 1998. According to Bridge executives, it is a more open platform that works with various digital data-feed protocols, including Reuters SSL and BridgeFeed, as well as delivery platforms, including Tibco, Triarch and Bridge Trading System. Customers can use Visual Basic to write to the data layer and integrate their own customized data analysis, internal or external applications.

BridgeActive1 has to look exactly like the existing EJV interface, says Squires, otherwise they'd have to change their systems, "and we don't have an appetite for that." He adds: "The goal is to get it in and get it stable, then worry how we expand the use of it."

Before it can switch to BridgeActive1, Barclays needs faster telecommunications lines between itself and Bridge, explains Squires, "because it needs more juice to get the data across." Barclays will more than likely move from a 56K circuit to frame relay. "As soon as we finish that, we'll run it in parallel with the existing infrastructure, but we won't cut over to it until, realistically, third or fourth quarter," he says.

Barclays-among the world's largest money managers, with more than $780 billion in assets, of which $104 billion is invested in fixed income-uses Telerate data as a pricing source for corporate, government and municipal bonds. However, Barclays is only using Telerate for pricing U.S. bonds, because Telerate's coverage outside the U.S. is not good, he says. For the actively managed fixed-income group, Barclays uses a combination of Telerate and Bloomberg.

About a year ago, Barclays conducted an evaluation of about five vendors, and came up with Bridge as the best option, says Squires. Bloomberg and Reuters were among the other companies considered. However, in the active fixed-income group, where Barclays invests in a lot of illiquid bonds, it's more difficult to obtain an accurate price, therefore, Barclays relies on both Bridge and Bloomberg. "The answer generally lays in the combination of both of them," says Squires.

However, he notes, the quality of the Telerate price data "is not as high as we would like it to be," adding, "To be perfectly honest, they're no better or worse than anyone else in that space." Bloomberg is also inaccurate when it comes to pricing bonds that hardly trade, he says. "We find the Bridge data, in some instances, is not as good as we'd like it to be, but when we compare it to Bloomberg and other choices, it's as good as anything else," says Squires.

For the active fixed-income group Barclays-a Telerate customer for the past five years-will continue to receive the Telerate feed through a Sybase data server product that was installed about six months ago. "They have installed a Sybase database on our site, which they treat as a remote node of their database," explains Squires. Bridge takes responsibility for populating the database, and Barclays simply selects out from the database.

In the active world, Barclays uses Telerate more in a research capacity for asset identifiers that are not available, for instance, to do data mapping between a Telerate securities identifier and a CUSIP number, versus a Bloomberg identifier. "The need for data is much higher in that world, because we're dealing with more obscure and typically more illiquid bonds," he says. "The active traders who won't use BridgeActive1 are more likely to continue using Bloomberg only because it has a broader set of data available." While the index managers are dealing with vanilla bonds, the active world is dealing with a "different kettle of fish, so those kind of things become important," he says.

At this point, the BridgeActive1s are really for people using the index funds, says Squires. In Barclays case, the BridgeActive1 will hook into other applications, including accounting software, its portfolio management system, which is used to price the unitized index funds, and its trading system, where it enters the generic characteristics of a bond.

"The index might say you need to hold municipal bonds with a particular maturity and yield characteristics, but it's not specific to each bond we need to own," he explains. After pricing the unitized funds through the accounting system, "we would definitely generate trade lists on the back of the data," says Squires. Barclays trades some of the active bonds over the Bloomberg Trading System to reach broker/dealers, while all of its index bonds are traded over a proprietary application. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio