InfoReach Unveils Free Multi-Broker Execution Service

Yesterday, Chicago-based InfoReach launched Brokereach, a completely free Web-based trading application that allows the buy-side to route orders to multiple brokers and see their positions update in real-time. Traders can route orders in single name stocks baskets and to algorithms of brokers that are on the network. As of this week, brokers using Brokereach include Credit Suisse, UBS, ITG, Jefferies, Lehman Brothers and TradeTrek Securities.The intuitive Web-based application leverages the network infrastructure and connectivity to multiple brokers that InfoReach has built up over the years for Inforeach TMS, a trade management system.

Brokereach is being offered at no-charge to the buy-side and the sell-side, which otherwise would pay connectivity charges if they go through order management system vendors. Certain OMS vendors charge $500 a month per broker connection and in some cases up to $1,000 per broker connection to route orders via broker algorithms, says Allen Zaydlin, CEO of InfoReach at a press briefing yesterday. "Because we made a no fee entry to the network, it opens up a market to small and medium size (buy-side) firms," he says.

Initially, the no frills execution service is aimed at "less execution savvy, buy-side firms that are using instant messaging (IM), Excel spreadsheets or phoning orders into brokers, "which doesn't let them see the execution performance in real time," says Zaydlin. In this case, the browser updates in real time so that fills are reflected on the screen. Similar to IM Trader from Boston-based Pivot Solutions, Brokereach converts IMs from Yahoo and AOL into text and then into a FIX messages. There is a quick order entry panel. The system also keeps four months of historical executions in its archive. "We capture time stamps which is important for compliance," says Zaydlin. "If they (trade) over the phone, they don't have the time stamp," he notes.

While Brokereach routes orders to sell-side trading desks and to their algorithms, it does not offer DMA (direct market access) into execution venues because that would require market data and exchange fees and drive up the cost, says Zaydlin.

One major benefit is that Brokereach gives brokers control over updating their algorithms through the technology. Because there is often a lag of several months or even half a year between the time that brokers release a new algorithm and the rollout by vendors, Zaydlin aims to fill this gap. "We're hoping the brokers will leverage it to deliver their products," says Zaydlin. One broker told him it was the best way to deliver their algorithms, says the CEO. InfoReach is giving brokers tools to update their algorithmic parameters. "Every broker will maintain their own algorithms," says Zaydlin. Brokers can use HTML and Javascript to enter their parameters. But Brokereach is going to add "a wizard very soon so they don't need to even know HTML," says Zaydlin. Brokers can use a simulator to test their strategies and play around the site before accepting live orders.

So far about 20 brokers have given verbal agreements to participate in Brokereach and many are going through legal approvals at present, he says. Most of the brokers are already connected because InfoReach TMS has connectivity to 45 to 50 brokers. Traders can look up all the brokers on the site, and have the choice of calling a smaller more obscure broker.

Inforeach has been working on the service for a year. It took so long because he wanted to keep it simple. Yet, InfoReach has s history of building very complex products, but the key here was to make sure it was very simple and low-cost, says Zaydlin. Even as buy-side traders mull over the need for more complex execution management systems, Zaydlin says there's room for an alternative that is lightweight and "can sit in the middle of OMS and the EMS."

Zaydlin says the Brokereach can serve as a back up to more full-blown OMSs and EMS, like Charles River, Latent Zero and Flextrade. If Brokereach gains traction, Zaydlin will add more complex functionality and while it's starting out with equities, he plans on covering futures and options trading in 2008. While there will be no connectivity fees in 2008, Zaydlin plans on charging 5 mils (millicents) per share, but that's not until next year.Yesterday, Chicago-based InfoReach launched Brokereach, a completely free Web-based trading application that allows the buy-side to route orders to multiple brokers and see their positions update in real-time. Traders can route orders in single name stocks baskets and to algorithms of brokers that are on the network. As of this week, brokers using Brokereach include Credit Suisse, UBS, ITG, Jefferies, Lehman Brothers and TradeTrek Securities. 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