Wayne, Pennsylvania-based FNX Ltd has launched an Internet-based offering of its Sierra System deal capture, trading and risk management platform. The eSierra platform, which is built on BEA Systems’ WebLogic Enterprise Server, integrates with Sierra System to provide a real-time interface between old and new technologies.
Developed in partnership with BEA, eSierra delivers Web-enabled deal capture, trading, price distribution, seamless STP and transactions management of FX, FX options, fixed income and commodities. The WebLogic Server allows “ultra high” volume transaction processing, which means Sierra and eSierra can support transaction volumes in excess of 12,000 trades per hour, say officials.
“The Internet has four main benefits – it means you can cut costs, promote STP, improve operational risk and risk management and expand the services that you offer your customers,” says Farid Naib, FNX’s CEO and founder. “There is a lot of talk about the front-end right now, but this isn’t being extended through to the back-end yet to provide a true STP solution. We’re trying to fit that space.”
“Our model is based on having the interbank market maker, its branches and its customers all using the same underlying infrastructure for trading, deal checking and risk management,” adds Paul Gibson, managing director Europe, Middle East & Africa, for FNX .
In addition to eSierra, FNX is due to launch Quantum this month, the retail order management component of the eSierra portfolio. Quantum allows users to transfer deal capture activities from the trading desk to the institutional client. “FNX clients can now offer their customers direct, real-time access to their trading accounts, as well as monitor account status, place orders, conduct simulations, run activity reports and view pricing more efficiently – and at a fraction of the cost associated with traditional global transaction management,” says Simon Moss, president.
By July, the company plans to launch a portal called Niagara, which will allow banks to offer services such as Sierra, research and other applets to clients.
Several banks have recently begun implementing various components of the FNX range. Thailand’s Bank of Ayudah PCL (BAY) and Daiwa Futures were the first to enter beta tests.
Naib says the BAY installation was undertaken in just three months. BAY has now shifted trading and processing of its capital markets operation onto a single automated system architecture, with risk management consolidated across all asset classes. FNX is stepping up its presence in this area, and has recently signed a deal with another regional bank in the area, details of which will be announced shortly. The project was done in conjunction with its Kuala Lumpur-based partner, PK Technologies, which has the rights to distribute FNX products in Malaysia, Indonesia and the Philippines. Naib says FNX is seeking additional distributors in other regions.
Meanwhile, Daiwa Futures is due to become the first Japanese institution to offer OTC options trading over the Web when it launches its service in July, using FNX’s systems via an ASP service model. FNX will announce its ASP plans by August, which will leverage the traditional Sierra System.
“We are currently the only firm offering STP over the Web via a GL (general ledger) accounting system. GL is the most boring part of the business, but we think it will soon become the most profitable part. We are trying to drive down the per trade costs. We estimate it costs between $125-250 to process a trade. We aim to drive the processing fee down to between $20-40 (depending upon the complexity of the instrument),” says Naib. “STP takes care of risk and operational risk, and promotes the feasibility of running higher volumes.”
“We will further drive the value equation by making the system available via an FNX ASP. This will allow our clients full access to the Sierra and eSierra systems without the add on cost of onsite hardware, back up facilities, software and hardware maintenance, etc,” says Naib.
“In three to five years, no one will buy software anymore, they’ll buy services,” says Gibson. “The first phase of the Internet evolution began with offering prices. The next phase will cover what a bank can offer back to its clients.”