Omgeo Looks to Repo Support

NEW YORK—Affirmation and allocation utility Omgeo is looking to expand support for repos in a future release of its Oasys allocation and acceptance service for fixed-income trades, DWT has learned.

"We do have big repos being processed today, but we need to enhance it to really get the full benefit, get more order flow going through there, and get the efficiencies that some of our customers want with the repo," says John Burchenal, managing director of market growth for Omgeo.

Repo is challenging to address because there are "sometimes multiple pieces of collateral that you might have to allocate in multiple ways," Burchenal says. "It's limitless in terms of the number of allocation pieces there could be. That's something we could take care of and it would be fairly complex, but we're working on it."

Although Omgeo released version 5.0 of its Oasys allocation and acceptance service last year (DWT, Feb. 20, 2006), Burchenal says there is a need to broaden its adoption.

"When anyone rolls out a new system or a new version of software, there's a lag, and it takes time for everybody to implement it. So we're still looking at that process and making sure that all our customers and dealers have gone on to the new version of Oasys," he says.

Burchenal says he does not expect another release as comprehensive as Oasys 5.0 to occur in 2007. "We're focusing on existing systems," he says. They "are the core of what we do and we'll be adding and enhancing them in various ways over the years."

The current release provides securities firms more support for complex fixed-income instruments like to-be-announced contracts for mortgage-backed securities and money-market securities including commercial paper.

Omgeo is not working on FIX 5.0. "It's going to take a long time" to be adopted, Burchenal says. Version 4.4 "took forever to implement and that was one of the big fixed-income releases," he says.

Throughout this year, Omgeo also expects to target more adoption among European firms and smaller dealers currently not connected to the Oasys platform.

"We're making some progress right now in Europe, which is less developed in terms of our partnership," says Burchenal.

Omgeo currently has more than 80 partners. They are "mostly order management system (OMS) vendors that have worked with us to create interfaces that allow their customers to then take it a step further and use them for the straight-through-processing portion of the trade," says Burchenal. As a result, "they can keep the whole life cycle of the trade within the OMS by communicating with us through that mechanism," he says.

Creating these relationships "provides leverage for us and provides a benefit to them because they create this additional efficiency within their system," he says.

On the dealer front, "almost all the large dealers are on board," Burchenal says. Last year was about "rounding up the rest of them that weren't participating."

Omgeo can now focus its efforts on the smaller dealers. "That last mile is always the hardest—those last smaller and less-used dealers," he says.

Smaller dealers have fewer dollars to spend and have to be convinced their investment is worth the expense, Burchenal says. "One of the big values of our systems is our partner community. You can log on to Omgeo and essentially have access to our community of customers and that whole community of dealers," he says.

Thus, "for each new dealer we sign up, it adds value for everybody, and those smaller dealers now have the benefit of the work that has already been done," he says.