Thomson ESG's New Internet-Based Platform

BOSTON--Thomson Electronic Settlements Group (ESG) is ringing in the new year with a new technology platform based on Internet-based platform standards. The platform, known as the Intelligent Trade Management (ITM) Platform, will host all Thomson ESG products and clients within the next two years as part of the company's efforts to facilitate straight through processing.

Thomson actually began rolling out the platform in December. Its Sequal product line, which includes Sequal Match and Sequael Report, was the first to migrate. Sequal products were the first migrated to the new platform because they were not Year 2000-compliant, explains Peter Tierney, director of product management at Thomson ESG.

Meanwhile, Thomson has filed an application with the Securities Exchange Commission to provide central matching services for depository-eligible securities. The move is being made in anticipation of a shorter settlement cycle that will essentially unite execution and the confirmation/affirmation.

"Central matching is on the critical path to T+1 or T+0," said Thomson ESG executive managing director Lee Cutrone. And of course, the central matching service will run on the new platform.

Clients of Sequal Match and Sequal Report were converted to enhanced versions, called Market Match and Thomson Report, which run on the new platform. Tierney says that the migration serves as "the closing chapter" for the Sequal services, which Thomson ESG purchased from the London Stock Exchange in 1996. Sequal Match and Sequal Report, which are product names that will no longer be used, were previously running on a Tandem mainframe environment before being ported over to the new platform.

The next product to be migrated to the new ITM platform, however, will be Alert version 3.0, which is to be released during the first quarter. Users of earlier versions of Alert will also be converted to the new platform after the new version's release. As clients upgrade to the new version, they will be migrated onto the new Java-based platform. Thomson's entire suite of services, including Oasys, Oasys Global and AutoMatch, will follow the Alert migration.

The ITM platform, a three-tier open client/server architecture, combines technologies from a number of companies. At the heart of the new architecture: BEA's Tuxedo, which manages the communication flow, and GreatWay Technology's Smart Message, which enables the translation of messages. As such, the new platform will be able to accommodate various industry formats, such as the Financial Information Exchange (FIX) protocol, and messaging standards of the Society for Worldwide Interbank Financial Telecommunications (Swift). Tierney says Smart Message enables Thomson clients to maintain their existing message types or embrace new ones as fresh industry standards evolve.

The ITM platform also utilizes the Java Internet programming language, Sybase relational database and Sun Micro systems' Solaris at the applications server level and Windows NT on the desktop.

"ITM represents STP," says Lee Cutrone, managing director at Thomson ESG. To help the industry cope with the increased volumes and take the significant risk out of the market, "it's not enough just to automate," he says. And that's where ITM comes in. "To get electronic trade confirmation beyond a T+3 or T+5 environment, we needed to think ahead," he says. "ITM is based on our vision of how the industry needs to products will evolve."

For instance, to make the trading process more efficient, ITM differentiates between static data, which is entered once and remains constant from trade to trade, and dynamic data--or live data--that changes with every trade and needs to be continually updated. Cutrone explains that the current trade process does not separate the two and tends to "dump" all the data together and continue passing that data back and forth, slowing down the process.

ITM is designed to eliminate the sequential step of passing static data back and forth by matching the information rather than continuing to exchange it. By providing real-time capabilities, all parties are able to view the trade information and status at any time. ITM will also be incorporating analytics supported by a data warehouse to provide the ability to analyze data for decision making.

Thomson's rollout follows other competitive initiatives all designed to solidify a spot in the future STP model being promoted by the Global Straight Through Processing Association (GSTPA). "We strongly support what the GSTPA is trying to do," says Cutrone. He adds that the ITM platform falls in line with GSTPA initiatives and that Thomson already provides many of the steps in the STP process.

In a similar vein, The Depository Trust Company launched a line of its TradeSuite package of services in October. TradeSuite is comprised of four post-trade software applications that create a STP solution and position the DTC as a formidable competitor in the electronic trade confirmation arena. Like Thomson's ITM, TradeSuite is based on an open architecture for STP that conforms to industry standards such as the FIX protocol and messaging formats established by Swift and the Industry Standardization for Institutional Trade Communications. The four DTC products encompass post-trade messaging, matching, settlement and communications and build upon the DTC's existing products and customer base.