The world of finance and asset management is getting smaller with Investec Asset Management and international stockbroker UBS`s new electronic system that allows for an automated equity trading and asset management system.
While other JSE brokerages have instituted STP (straight through processing) systems, Investec Asset Management (IAM) believes this is the first such system to link a South African institution with an international partner, in the form of Swiss-based UBS.
IAM chief dealer Patrick Mathidi describes the system as the "gateway into the world", because it connects IAM to multiple brokers across geographic locations and asset classes, facilitating trade and settlement across multiple exchanges.
The system uses the global industry messaging standard FIX (Financial Information exchange Protocol) via the Peresys FIX Hub, as well as enhancements to Investec Asset Management`s own order management system by AFA Systems.
In the past four months, IAM has been trading and settling equity trades electronically with some local JSE brokers, using the StreamXChange STP platform from AFA Systems, with Peresys providing the messaging environment between Investec`s front-office system and the broker networks.
"However, our new connectivity with an international broker gives us global `reach` and makes us part of an elite group of asset managers globally, who are able to route orders and settle them electronically," Mathidi says.
Developed in 1992, FIX was originally designed for equities, but now also includes forex and fixed income transactions and effectively replaces phone/fax/e-mail communication between institutions and their chosen brokers.
According to Richard Bell, director of sales and account management at Peresys, SA has lagged behind in the adoption of STP for several reasons.
"These include the integration challenges inside the asset manager and JSE member environments, the lack of a fast, reliable and cost-effective local financial messaging network, as well as the understandable reluctance of any single player to `make the first move`," Bell says.
"The use of FIX for sending post-trade allocations has been a particularly innovative aspect of this implementation," says Mark Goodman, account manager of equities trading at UBS, London. "This is one aspect of the process where the potential benefits for the asset management industry and broking community are only just being recognised."
Mathidi says it won`t be long before the rest of the industry "catches up", as the benefits, efficiencies and enhanced performance for clients become much more apparent. "We already have a lot of interest from the market. Once everybody is on-board, it should help fast-track the JSE and STRATE`s (Share Transactions Totally Electronic) initiative of shortening the current settlement cycle, a further enhancement to the JSE`s quest for global competitiveness."
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