Icap Sydney Deploys Kalahari Pricing

SYDNEY-The Sydney branch of interdealer broker Icap has gone live with an Australian dollar interest rate derivatives pricing tool from vendor Kalahari Ltd., Icap officials tell DWT.

Developed, installed and tested by Kalahari within two weeks, the new platform launched on Oct. 1, with a successful first day of trading for both the desk and the system, says Brad Ridge, CEO of Icap Sydney, who spoke to DWT from London. "Kalahari was commissioned by Icap Sydney at the beginning of September and delivered the first stage of the product at the beginning of October to coincide with the start of 19 new staff members who defected to us from the Collins Stewart group," says Ridge. Kalahari is based in the U.K. county of Surrey, outside of London.

In the beginning of October, one of two interest rate teams based at Tullett Prebon, the inter-dealer broking arm of Collins Stewart Tullett plc. (CST), did transfer to Icap, acknowledge CST officials. "[But] it wasn't a defection," says Nigel Szembel, head of communications at CST. "When we acquired Prebon, we saw we had two teams out there and decided to sell one of them," Szembel says. "We sold the team to Icap."

A fierce competitor of Icap, CST acquired Prebon Yamane in October 2004. Following the merger, CST took the decision to phase out some of the Prebon systems, resulting in IT staff cuts and the outsourcing of IT executives and personnel (DWT, Oct. 25, 2004 and Oct. 24, 2005). Last month, CST announced it was outsourcing 20 employees to Rule Financial for the support of legacy Prebon systems until they are replaced by Rule products. The platforms to be phased out are order management systems (OMSes), a market data platform, a business activity monitoring dashboard, billing systems, cash-flow systems, and clearing platforms (DWT, Oct. 24).

As for Icap Sydney's systems, the firm is using Kalahari's kACE price discovery tool, confirms Graham Mansfield, director at Kalahari in London. "But it had to be precisely built for their requirements in Australia," Mansfield says.

Regarding the specific requirements of Icap Sydney, the pricing platform had to integrate "all short-term interest rate products against foreign exchange and capital markets," Ridge says. "We considered no other vendors as we knew the bespoke specifications we needed, and our previous working experience with Kalahari allowed us to assess whether the kACE product was the best technological environment in which to deliver our requirements," he says.

Mansfield says the pricing platform exploits Icap Sydney's client/server IT architecture. It is also "connected to real-time data and it subscribes to real-time data," he adds. "It also publishes out real-time derived prices, as well, to Icap's customers."

The pricing tool was tested before it was implemented across the Icap trading floor in Sydney, Mansfield says. "We did that [testing] back in Surrey in the U.K.; we had the specification, which was given to us by Icap. Then one of our guys spent a week-and-a-half in Icap's offices for the go-live date and made sure everything was correct. [He] was then on hand to do one-to-one training with the guys."

Mansfield says that during the development of the pricing tool, Kalahari used a video conferring tool to demonstrate to Icap personnel in Sydney the functions and make adjustments to the pricing tool that were in line with Icap's feedback. In terms of support, Mansfield says Kalahari has teams in the U.K. and New York that offer around-the-clock assistance to Icap personnel.

Ridge says the platform can be extended beyond Australian dollar interest rate derivatives relatively easily.

Once the product is set up, we can easily transfer it and we may be looking to do it on a global basis," Ridge says. "The activities would include, firstly, talking to the brokers at the desk level about how they could do business a little bit differently and how we can integrate such products a little bit more efficiently-that's the first line of thought of the whole process. We will be looking to add onto it in the next three to six months."