Gateway Financial Solutions has just gone live with FIXChange.net, a network for connecting buy- and sell-side traders directly to independent floor brokers on the floor of the New York Stock Exchange. The system, which purports to be third-party agnostic, will allow traders direct access to subscribing independent brokers via the NYSEs Broker Booth
Support System (BBSS) and e-broker hand-held devices. Gateways revenues will come from charging the NYSEs independent brokers based on volume transacted over the network.
Gateway and the FIXChange.net concept emerged over a year ago when A.W. Bertsche, a NYSE member and an investor in Gateway, attempted to sway NYFIX, then Trinitech, to open up its NYSE trading network to non-member brokers as well as money managers that transacted over different order management systems. NYFIX is a developer of electronic trading systems and its NYFIX Network uses FIX to allow communication of trade data among the buy side, sell side and exchange floor.
For non-member firms, there isnt presently a way to get orders to the floor, unless youre using Trinitech and Trinitech has limitations, says Todd Bertsche, ceo of A.W. Bertsche. You needed to have Trinitechs own hardware. And, if you look at the floor of the NYSE, you see a ton of people and not a ton of space. You dont need more hardware limiting your booth space.
When it became apparent that Trinitech was unwilling to accommodate the firm, Bertsche approached Javelin Technologiesalso an investor and partner in Gateway Financialto create this type of functionality, which approached Transaction Network Services to handle facilities operation and management. For its part, Javelin is not only providing the FIX software, but the technical resources for maintenance and operation of the servers.
Bertsche adds that another sticking point with NYFIX is that it did not offer hand-held devices at the time. NYFIX is about to release a hand-held device that allows lookups, but not executions.
FIXChange.net could prove to be a boon for institutional money managers who want direct access to the floor and greater control over their orders. The idea here is that institutional traders want to be able to get direct access for some types of transactions, explains John Petschauer, ceo of Gateway. Theres still a need for them to go to the big broker/dealers for other types, but there is a growing need for institutions that want to transact anonymously, and get very quick execution and have someone be, really, a smart limit order book on the floor for them.
Traders will first route orders through the Autex Groups TradeRoute systemproviding connectivity for virtually any order management systemwhich then feeds FIXChange.nets servers residing at TNS server farms in Virginia and New York. Orders are then passed along to the NYSEs BBSS and e-broker.