A pair of direct-access brokers that have to date focused exclusively on the active trader market are on the verge of making a splash in the buy-side arena for the first time. CyberCorp, which is owned by online brokerage giant Charles Schwab Corp., and Tradescape.com, which owns the MarketXT ECN, both intend to launch institutionally oriented intelligent order routing front ends before the end of the summer.
Known for their order routing and ECN portal software, CyberCorp and Tradescape have thus far only pursued active, affluent investors. But both firms now think it is time to deliver their technology to institutional investors.
"Institutions need this technology more than any other type of animal on Wall Street," says Omar Amanat, Tradescape's CEO. With that in mind, he says, Tradescape expects to launch a new front end, dubbed Tradescape Institutional, before the end of June. Tradescape Institutional, which will be targeted at both "middle-market money managers" and sell-side broker/dealers, will be driven by "re-licensed" versions of Tradescape's Electronic Communications Portal and Smart Order-Routing Technology (SORT) engine, says Amanat.
CyberCorp, meanwhile, is getting geared up to launch CyberTrader Pro, a buy-side-oriented order-routing system that will be equipped with institutional order-entry and portfolio management functionality. CyberCorp founder and Chairman Philip Berber, noting that Charles Schwab's Schwab Capital Markets unit it the "second-largest" over-the-counter market maker, says that CyberCorp has an edge in the race for buy-side market share because of its parent's "array of relationships" in the institutional arena.
CyberTrader Pro, which is currently in beta tests internally at CyberCorp, is scheduled to go live around the end of this summer. Berber declines to specify the firms that have shown interest in Pro, but says that rivals that try to attack the buy-side market will simply be emulating CyberCorp's strategy. "We were the pioneers for the idea to take this type of technology to buy-side institutions...and I would fully expect that others will follow our lead," he says.
But Amanat says Tradescape will enter the institutional arena before CyberCorp, in an attempt to bring "e-liquidity" to institutional investors that are "looking for aggregated blocks of stock" to trade. In fact, to expedite its move into that market, Tradescape has already hired a full institutional sales force. That team, says Amanat, will be led by a pair of former global sales heads from Reuters' Instinet Corp. Amanat, however, declines to specify any of Tradescape's new sales hires.