A Supplement to

Securities Industry NewsSecurities Technology

Integration, product diversification are supplier priorities

Globalization, mobility, messaging fuel

growth strategies

A Supplement to

Securities Industry NewsFall 2006

Integration, product diversification are supplier priorities

Globalization, mobility, messaging fuel

growth strategies

2006 Ranking of FrontOffice Solution Providers

Securities Technology

2006 Ranking of FrontOffice Solution Providers

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14 Securities Technology 50 Fall 2006

Rounding out the Fast Five, as measured by2003-2005 compound annual growth(CAGR) in end users, are companies occu-pying different niches but with a few char-acteristics in common: scalable technology,

customized solutions and responsive customer service. Thewaves carrying these companies, like IMTrader and Pyxis,are also highly transactional. ViewTrade Securities, whosetwo-year CAGR of 1,449 percent was tops by a wide mar-gin, saw its cross-border trading platform business take off,particularly among U.S. brokerages.

Pivotal Corp., a division of CDC Software, has generated itstriple-digit CAGR by providing customizable and compre-hensive customer relationship management (CRM) systemsto midsize firms and individual business units. The companyputs a premium on database technology designed to support in-terdepartmental collaboration, as well as accuracy of the un-derlying data.

BondDesk Trading, whose 154 percent CAGR was goodenough for number five, edging out the 140 percent of new-issue processing specialist i-Deal, has played a major role indistributing and automating fixed-income securities for a cus-tomer base that now includes a who’s who of the retail bro-kerage industry. It is the New York broker-dealer owned byBondDesk Group and operates the first alternative tradingsystem for odd-lot bond transactions, dating back to 1999.The network has been growing rapidly throughout this decadeas interest and activity in fixed-income markets have climbed.

These are case studies with a bullish edge. They may not inthemselves replicate the excitement—and certainly not the ex-cesses—that distinguished the great 1990s boom in tech in-vestments and innovation. But they point to what’s possiblewhen well-managed companies with an entrepreneurial spir-it bring out well-positioned products on a strong technologi-cal foundation. And good timing doesn’t hurt, either.

Pyxis Mobile was in the right place at the right time—whenBlackBerry devices, made by Canada’s Research in Motion,were overtaking cell phones as Wall Street’s “must have” com-munications accoutrement. Pyxis helped free fund management

firms’ personnel from their offices and screens with enter-prise-class, mobile versions of desktop applications.

IMTrader has been at the forefront of the instant messaging(IM) migration from frivolous online chatting into the deadly se-rious business of securities trading. The field has attracted newentrants—Toronto-based Belzberg Technologies, for one, with itsChat Trader—but IMTrader has been building and refining itstechnology with both the buy and sell sides since 2002 and hasexpanded its range of asset classes. If instant messaging continuesto gain popularity, then IMTrader’s future looks bright.

ViewTrade’s breathtaking growth has come, to be sure, ontop of a relatively small base to reach 3,850 seats as of year-end 2005. That’s a positive as far as managing director JamesStClair is concerned. “The fact that [ViewTrade is] small makesus nimble,” he says. It’s also a throwback: Much of that growthhas come by word of mouth. “There’s an incredible market outthere for [our] technology,” says StClair, who is looking toput up another, possibly even better, banner year. “We justgot our first sales manager,” he notes.

ViewTradeUntil last November, Jersey City, N.J.-based ViewTradeSecurities did most of its business abroad. This year it hasbrought in more than 40 brokerages as clients. “We’ve gottena very strong response since we first started getting U.S. clients,”says StClair. “And we haven’t even really started advertisingyet, or going to trade shows.”

He attributes the success to the scalability of ViewTrade as

Trendy Niches PropelHottest Growth Companies By John Wagley

The 2006 Fast Five2005 seats 2-year CAGR (%)

ViewTrade Securities 3,450 1449

Pyxis Mobile 4,500 454

IMTrader 1,400 216

Pivotal Corp. 5,570 182

BondDesk Trading 65,000 154

Of the fastest-growing companies in the Securities Technology 50—the Fast Five—two are riding Internet-era

technology waves that have swept across the wider society and into core operations of financial institutions:

IMTrader, which offers a trading system based on instant messaging, and Pyxis Mobile, which developed a

range of institutional sales, research and administrative applications for handheld devices.

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Fall 2006 Securities Technology 50 15

an application service provider (ASP), or technology host forits customers. “I think our competitive edge has come fromour size,” he says. “Most of our competitors tend to have muchdeeper pockets, but that doesn’t make their systems any better.... With some larger [ASPs], customers may be told to take itor leave it—[the vendors] are not as helpful if you come backwith specific little needs. But for some of our customers, with-

in a week or two our programmers or de-velopers can come back and customizethe solutions. It’s been a competitive edgefor some time.”

Seven-year-old ViewTrade and its sub-sidiaries develop and deliver trading andother products via an online, real-timehub. The company’s Trading Platform is afoundation for developing execution-fo-

cused, valued-added products with partner companies—amongthose listed on the ViewTrade Web site are Jefferies & Co., ManFinancial and Penson Worldwide—as well as clients and theirend users on a global scale. “[Our service] is very cost-effec-tive,” says StClair. “Clients are paying in some cases half of whatthey’d be paying with our competitors.”

The ASP model has grown in popularity in recent yearsdue to demand for trading multiple asset classes on singleplatforms and automated trading growth overall. Notes RandyGrossman, research manager at Financial Insights, “Back inthe 1980s, ASP had a different name—time sharing. You pur-chased time on someone else’s computer, sharing resources.You take away a lot of the costs of running a system. You ba-sically offload that onto that provider.”

Drawing on data-content providers such as ComStock andMarketWatch, ViewTrade remains focused on internationaltrading, which has a growing need for systems that, the com-pany says, “bring global trading transparency and parity for in-stitutional clients of all sizes.”

Pyxis“Financial services cries out for mobility solutions,” says GeneKim, consulting manager at Financial Insights. “You have anoutside sales force in the wholesale arena. It makes a lot ofsense to have transaction and fund data with you.”

That’s where Waltham, Mass.-based Pyxis Mobile comesin, enabling fund managers to communicate with clients, traders,

analysts and market-data and enterprisesystems while on the road. On a founda-tion it calls mPlatform, Pyxis offers in-vestment industry applications includingmWholesaler, mInstitutional, mPortfolioManager, mAdvisor and mReports.

“Whether it’s institutional investors,wholesalers, fund managers or corpo-rate management, we understand the

specific needs of these business units across the financial en-

terprise,” says Pyxis CTO Todd Christy. Pyxis says it suppliesthe most widely used wireless software in financial services,with customers such as Pimco, Putnam Investments andDeutsche Asset Management—all told, 22 of the top 50 U.S.asset managers and more than 40 percent of the global top 50.Pyxis recently expanded its European presence, opening aLondon office.

“Pyxis doesn’t just try to throw what’s on the desktop ontoa handheld,” says consultant Kim. “I think what sets Pyxisapart is that its approach has been changing; they’re pushingout what already exists. It’s gotten to the point where at leastone client has asked if they can take what’s on their wirelessand use it on their desktops, reversing the order.”

The technology can access leading buy-side and hedgefund order and trade management systems, portfolio man-agement, accounting and compliance. It also provides real-timemarket information from Reuters, Dow Jones and other datasources. Tom Santaniello, an application manager at PioneerInvestments in Boston, said Pyxis software improves sales-staff productivity. “Since their mobile counterpart can nowaccess their own data with BlackBerrys, internal salespeoplehave more time to focus on managing customer relationships,”he says. On the BlackBerry, users obtain immediate accessto performance data, profit and loss, exposure reporting, port-folio holdings and benchmark comparisons.

“The technology is still not without glitches,” says Kim.“There’s always the issue of the mobile-carrier reliability andthe different kinds of devices. But I think mobility is still earlyin its adoption, and Pyxis has gotten in early.”

IMTraderDeveloped by Pivot Solutions, a 2004 spin-off of Boston-based Eze Castle Integration, the IMTrader system capturesinstant messages and converts them into standards-com-pliant trades. The technology has been used to trade morethan 3 billion shares.

“We’ve seen a dramatic, grassroots adoption of IM on WallStreet,” says Pivot CEO Furqan Nazeeri.IMTrader custom-designs the mass-ac-cepted technology for investment pro-fessionals, he says. Clients range fromworld-class broker-dealers to “five-guys-in-a-room” hedge funds.

Analyst Kim calls it “very much an in-tegration play” that automates manualprocesses and reduces errors. “The aver-

age data-entry professional might make five errors in 4,000 key-strokes,” he says. “Each of those errors creates pain in theback office.”

In June, IMTrader introduced Market Alerts, designed tobroadcast to large distribution lists information including in-dications of interest, market looks, news and earnings releasesand pre-trade crosses. Last year, IMTrader rolled out a com-

Todd Christy

Furqan Nazeeri

James StClair

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16 Securities Technology 50 Fall 2006

munications and trading platform specifically for the buy side.“The technology was easy to install; [it] seamlessly inte-

grated with our existing technologies and compliance systemsand is simple to use,” said Steve Menendez, VP of institu-tional trading at Flagstone Securities. “Additionally, we havean ongoing record of all conversations that can be easilysearched and retrieved.”

As younger workers move into Street careers, IM usagecan only go higher, says Nazeeri. He adds, “I have a 15-year-old niece. She says she only uses e-mail to talk to old people.”

PivotalVancouver, Canada’s Pivotal Corp. emphasizes the flexible andscalable nature of its CRM software, which it says increases

operational performance, streamlinesvalue-chain processes and improves over-all customer service. That’s been a boon toAllianz Dresdner Asset Management: “Theinvestment management business is veryspecific, detailed and highly complex,” saysGiles Hardy, the firm’s head of e-business.“Due to the customization capabilities ofPivotal technology, we have been able to

adapt the system to meet these needs.”Users get the often elusive, comprehensive views of their

client relationships “to uncover new opportunities and deliverbetter-targeted service,” the company says. The software ensuresdata accuracy and accessibility with a single, shared client-in-formation database, allowing for cross-functional account serv-icing and broader interdepartmental collaboration. “A key ad-vantage of the solutions is that they show what customers’ assetslook like at any time,” says Jason Rushforth, Pivotal’s financialservices managing director.

“What we’re looking to do is automate the front office ofany business,” he adds. “We want to deliver complete cus-tomer service solutions” that involve “business marketing,client sales, ... anything involving interaction.”

Pivotal’s growth can be attributed in part to its developmentof industry-specific applications, says Rushforth, which in-clude CRM for Institutional Asset Management, CRM forWholesale Asset Management and CRM for Capital Markets,in addition to commercial banking and private banking wealth-management products.

There is also an international push to Pivotal’s growth.“Many of the institutions are looking for global solutions,”says Rushforth. “You have to support multicurrency and mul-tilingual [needs]. If I’m a manager in North America, that willbe part of our core product. I think that gives [Pivotal] a hugeadvantage in the marketplace.”

The company’s financial industry clients range from AlliedCapital Management and Julius Baer Investment Managementto regionals such as Memphis, Tenn.-based Morgan Keegan &

Co. and Bridgeton, Mo.’s Vantage Credit Union. The compa-ny also has some “firm understandings” with at least a fewhedge funds, says Rushforth.

Challenges for Pivotal are more macro, or tied to marketcycles, he says, adding, “The economy is probably always thebiggest challenge—especially in the investment banking space,”but he is confident that “we have a very rock-solid businessmodel.”

BondDesk“Essentially, broker-dealers and their retail reps are looking atways to purchase fixed income with confidence,” says RobertSlaymaker, CEO of Mill Valley, Calif.-based BondDesk Group.Before BondDesk, “many had to rely on prices at their own

trading desk. Now they see offerings atmultiple dealings. They’re more confidentin getting the best price and execution.”

BondDesk executes over 20,000 trans-actions daily; clients can access 30,000live taxable and tax-exempt security of-ferings. More than 90 broker-dealers sup-ply inventory to participating traders, fi-nancial advisers and individual investors.

The firm’s technology solutions integrate with clients’ applica-tions, matching existing workflow and screen layouts.

The company continually works to improve functionality,says Slaymaker. “We have been growing based on the need forour service,” he states. “Our basic premise is more trans-parency and more tools for decisionmakers. Our technologyis built to meet the specific needs of our clients.”

Last year it enhanced execution and compliance throughthe MarketView & Trade Monitor System, an electronic toolkit that automatically alerts firms when its customers’ tradesstray too far off prevailing market information. Trade Monitoralso records trader documentation and supervisory notes foreach trade, allowing a firm to flag problem trades. The system’selectronic archive records pertinent MarketView data at thetime of execution.

Popularity breeds more success and is bringing BondDeskto “critical mass,” says Slaymaker. In June, Boston-based pri-vate equity firm Advent International agreed to buy a major-ity stake in BondDesk, which had been controlled by a con-sortium of financial institutions.

“With Advent as our partner, we will continue to execute ouroriginal strategy,” Slaymaker said at the time. “We also gainaccess to their deep financial markets expertise, as well as theirglobal network of investment professionals and contacts.”

Advent and BondDesk management are optimistic aboutfixed-income market growth as the baby-boom generationages and turns to this asset class. “We’re trying to be thethought leader, and we believe we’re making headway,” saysSlaymaker. ■

Robert SlaymakerJason Rushforth

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