Wed, 06/06/2007 - 06:55
BidRoute is set to be launched later this month by three prominent investment industry practitioners as a price discovery tool that enables best execution for investment managers by demonstrating accountability and broker performance.
The principals of BidRoute are chief executive Barry Marshall, the former chief operating officer of Gartmore's investment division who signed the UK's first commission-sharing unbundling agreements in 2003, chief technology officer Kevin Houstoun, the architect of the FIX Protocol and chairman of the FIX technical committee, and chief operating officer Julian Lee, a leading authority on front office IT for investment management firms.
Says Marshall: 'We're aiming to help a market that is undergoing greater investor and regulatory scrutiny. BidRoute saves the dealer time, delivers transparency and demonstrates to investors that best execution has taken place. This tool will empower the investment management industry while simultaneously benefiting brokers, end-investors and regulators alike.'
In 2006 portfolio trading, defined as any trade of 15 or more stocks with a total aggregate value of USD1m or more, accounted for 40 per cent of all equities traded in the US or on a pan-European basis, according to Greenwich Associates. With BidRoute, all portfolio trades can now be easily automated and performance tracked and, if desired by the dealer, opened up to an international directory of brokers.
BidRoute has devised a number of functions for investment managers, including electronically ascribing stock characteristics to keep the portfolio trade masked, a search function of all relevant brokers on its books, and a public or private auction setting. However, investment managers who want to use only their existing broker relationships can continue to do so within BidRoute, whilst simultaneously creating a MiFID-friendly audit trail.
Sheena Kelman, head of dealing at Martin Currie Investment Management, says: 'Best execution is an essential part of good investment management. We are always interested in tools that genuinely help us do better for our clients. BidRoute is an interesting new proposition that really looks as if it will benefit both us and our clients.'
According to Lee, BidRoute also adds electronic operational controls to the portfolio trading process. 'There is strong market demand for a tool that safeguards users against the operational risks posed by human error,' he says. 'This was a key consideration in the interface design. We have incorporated checking and vetting features which all users pass through prior to posting live bid information, which has proven to be a key selling point for both traders and brokers.'
Using BidRoute, traders will now be able to put a portfolio of stocks out to multiple brokers around the world in the same time it would take to deal manually with a small number of brokers with whom they have established relationships. It will also give them access to specialised brokers not previously on their radar.
The company's principals believe BidRoute is set to become home to an international network of brokers who can manage their own profiles based, for example, on sectors of expertise and region. Brokers will now have access to trades previously closed off to them and will be able to obtain feedback on their performance in the bid process which could help to make them more competitive.
'BidRoute is designed to be as simple and intuitive as possible,' Houston says. 'It is secure, easy to install, works seamlessly with FIX and other applications and has a user-friendly interface. Dealers can be up and running within minutes using web-based technology and can import their own data or create it within the system. We expect BidRoute to become an essential tool for brokers to get in front of firms driving the big transactions.'
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