In 1996, George Kledaras concluded that the securities industry needed help in implementing the then-three-year-old Financial Information Exchange (FIX) protocol for transmitting trade messages between brokers and asset managers. Kledaras left his job as a trading systems programmer at New Yorkbased asset manager BlackRock to start Javelin Technologies. In 2002, after having sold its FIX software to some 300 institutions, Javelin sold itself to Stamford, Connecticutbased electronic trading firm Nyfix for $55 million in cash and stock.
Kledaras, 40, is tinkering with FIX again. Through a new holding company in New York, Kledaras Technologies, he has launched two ventures: FIXML Flyer, which he asserts will "reinvent high-volume electronic trading"; and CecilRep, which has developed a Web-based portfolio management and reporting system.
As he did at Javelin, Kledaras has adopted the Java programming language as his basic building block. He is adding a new ingredient: the extensible markup language, or XML, standard, which he believes will better accommodate the fixed-income products being added to e-traders' repertoires. And he offers FIXML Flyer on the cheap -- its flat $11,000 annual subscription is one tenth the cost of some comparable licenses for trading and risk management software. "Flyer saves us a lot of time over having to support multiple solutions," says Joseph Nirta, CTO of Mill Valley, Californiabased BondDesk Group, which uses the software in its BondDesk Trading online platform.
"It was time to innovate again, but around costs," says Kledaras of his new venture. "If we can squish the cost down and make sure people have a clear path to get thousands of connections cost-effectively, they don't have to hire an army." -- Shane Kite
Derivatives software wants to be free
First came Linux, the operating system that, because it's free, upended the economics of programming by encouraging software developers to test, sharpen and deploy it throughout the corporate world.
Now comes NX Tools. This product of NumeriX, an 80-employee New Yorkbased shop, won't exactly galvanize the open-source software movement as Linux did, but it has been gaining notice in the niche where NumeriX is a big player: derivatives pricing and portfolio management. "Based on the number of companies that have called to request information, we think this is going to be very successful this year," says NumeriX president and COO Steven O'Hanlon.
Founded in 1996, NumeriX has made 80 percent of its sales directly to its customers -- about 100 financial institutions and consulting and auditing firms. Hoping to stimulate distribution of its NX Pricing & Risk Engine through other, "partnership" channels, NumeriX in December began licensing its NX Tools programming kit
free to independent software developers. O'Hanlon believes that the partner approach will increase sales in new asset classes and industries such as energy and mortgages. NumeriX collects a license fee when another company makes a sale that incorporates its software.
One immediate growth opportunity is in credit derivatives trading, which "has increased demand for analytics at nontraditional, quant-driven shops," notes Michael Iver, the company's head of sales.
James Tomlin, CEO of London-based trading technology supplier Tamesis, explains that because "a growing number of hedge funds are dedicated to trading these esoteric credit products," his company has embedded NumeriX's analytics in a system geared toward firms that are too new or too small to quickly develop that level of sophistication on their own.
With companies like Tamesis and London-based systems integrator PA Consulting Group on board, NumeriX expects that within 18 months it will be making 80 percent of its sales through development partners. -- Marsha Zapson