A New Front End

In the same way that a blacksmith uses an anvil to shape hot metal, Northcross Capital, a London-based structured products boutique firm, is now live on Anvil Software's Denarius front-office platform. Northcross, founded by a number of former sell-side participants last May, opened its doors for business at the start of this year and is using Denarius for front-office trade capture, liquidity monitoring and risk management.

According to Can Bitirim, partner at Northcross and previously head of asset and liability management at Commerzbank in London, Anvil was always in the running for the Northcross contract because of its reputation in the wholesale banking market as a vendor that understands the nature of the business and its approach to making the necessary tweaks to its technology to ensure a close fit to the business it supports.

"We were introduced to Anvil by [Jason Van Praagh, partner at Northcross Capital] who had previously used Anvil's ARTS technology on the sell side," Bitirim says. Van Praagh had previously been the global head of treasury sales at Rabobank. "We'd spoken to various other vendors and looked at other products, but what made the difference for us was Anvil's combination of size in terms of its market profile—Anvil has a number of wholesale products which gives it credibility—and the fact that it has been around for a number of years."

Bitirim says that once the specifications of the project had been undertaken, the Denarius implementation took about six weeks—a relatively short time frame for a front-office implementation. A lot of this, he says, was due to Northcross being a so-called green field site in that it did not have to address the typical switchover or legacy issues that plague replacement-type implementations. "I've done that at both of my two previous institutions and the hassle factor of having to do parallel runs and reconciliations is extraordinarily laborious," he says. "One thing that is impossible when you change systems in a bank is to stop everything and roll off one system and start another on a clean sheet—and that's not even considering the politics in terms of interdepartmental dependencies."

Van Praagh confirms that Northcross is using Anvil's Denarius for trade capture, which the investment manager uses for all the products it trades due to the platform's multi-asset-class support.

"It also allows us to monitor our risk on a pre-trade and post-trade basis at both the transaction and portfolio level," he says. "It has a bespoke report generator that allows us to generate certain reports—real-time and overnight—that we need for the structures we're running. We also use it for liquidity risk management, interest-rate risk management, and foreign exchange risk management, and those functions were all available off the shelf."

The Northcross contract represents something of a milestone for Anvil; the vendor has enjoyed considerable success on the sell side, but the buy side is relatively new territory for the firm. "We've been saying for years that our systems could be used by the sell side or the buy side," says Malcolm Clark, director and strategist at Anvil. "The shift in focus has come from the potential market out there in that most generic buy-side organizations are still using Excel spreadsheets, faxes and e-mails to get their information around the organization.

The size of an organization will dictate its needs, Clark says. "Some of the more aggressive investment managers have realized that they need more appropriate trading systems, but for the smaller organizations like hedge funds and special purpose vehicles you can get away with spreadsheets and paper tickets for a lot longer because your trading volumes aren't high enough to warrant a dedicated trading system," he says.