South Africa’s Investec Asset Management has implemented the first fully automated equity trading and settlement process linked to an international broker ‒ UBS — allowing local traders access to multiple brokers across geographic locations and asset classes for the first time, the company announced on Monday.
Patrick Mathidi, chief dealer at Investec Asset Management, labelled the new trading process as the “gateway into the world”, facilitating trade and settlement across multiple exchanges. It uses the global industry messaging standard FIX (Financial Information exchange Protocol,) via the Peresys FIX Hub, as well as enhancements to Investec’s own order management system by AFA Systems.
According to Mathidi, Investec has been trading and settling equity trades electronically over the past four months with some of the local JSE brokers (which on its own was also a first in this market), 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 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 said. “The new process is much faster, completely paperless, more cost-effective and eliminates the element of human error. It also enables our dealers to monitor orders as they are executed, bringing us a step closer towards achieving best execution for our clients.”
Developed in 1992, FIX was originally designed for equities, but now also includes forex and fixed income transactions and effectively replaces phone/fax/email communication between institutions and their chosen brokers. According to Richard Bell, director of sales and account management at Peresys, South Africa 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.”
“Investec Asset Management is taking the lead in global electronic trading via FIX in South Africa and we are very pleased to be able to contribute to improved trading efficiencies and quality control for such an important client,” said Tim Wildenberg, Global head of Electronic Execution at UBS, London.
“The use of FIX for sending post-trade allocations has been a particularly innovative aspect of this implementation,” said Mark Goodman, account manager at 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 is convinced 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 initiative of shortening the current settlement cycle, a further enhancement to the JSE’s quest for global competitiveness.” – I-Net Bridge