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CodeStreet presents complex fixed income information in clear graphics that sales staff and traders can understand at a glance.
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In fixed income trading, satisfying customer needs has long involved sharing information among traders and sales staff during the day or at morning meetings before trading opens. What’s in the inventory? Where are prices heading? Is the market looking for more safety or higher returns? A salesman’s success depends on keeping track of what the firm has and what his customers want to buy or sell and then trying to bring the two sides together in a trade.
A new product developed with input from a major investment house is designed to improve the way the sell-side fixed income desk works. One fixed income trader who worked on designing the product and whose firm was an early adopter describes it as “a platform that fits the workflow of sales and trading.”
“A key use is as a position publishing platform,” explained the trader, who spoke on the condition that neither his name nor that of his firm would be used. “I may do a transaction with a customer where I buy a bond. Now that goes into a Bloomberg-based platform and CodeStreet reads that I have this position. It will alert me that I have a new position to deal with and I will click on it to bring the position up. What do I want to do? I can make a two-way market, I can offer it and bid it, or I may just show an offer. Then I have to decide how many I want to show. Maybe I want to show all, or some, or I will spread it to a benchmark – most of our trading is based on the treasury curve. Then I hit the button that says ‘Publish.’”
The information will scroll real-time to his sales people.
“It will show [his sales team] the new position, it will say that it is new and show the level I am offering it at. They, in turn, can go to the inventory and sort it in any fashion, such as largest positions, maturity, or name. They can see the full description of the bond, what the spread is, how that translates to yield and price, and ratings. It will also indicate to a salesperson whether any accounts that he covers are already owners of the bond.”
The product that the
trader is describing is Code-Street’s Teamwork. According to Howard Pein, CEO of CodeStreet, traders, salespeople and electronic execution venues need to work together as a team to service the needs of buy-side clients, such as institutions and pension funds.
The whole point is to drive revenue,” explained Pein. “We are about driving revenue through generating trade ideas. Trade ideas don’t come in a vacuum, the software has to capture what is going on at the trading desk, understand what the trader wants to do, know the inventory, be aware of market prices and conditions, while also keeping track of what a customer is interested in. It must also know what the customer has bought, what recent news has an impact, and any changes in credit.”
A brilliant salesperson will remember some of this, but even the best can’t keep track of all the bond issues a firm has, or what his customers want to trade. CodeStreet puts all these details into a software program that includes a view of the customer, what he has expressed interest in, and if he is trying to make a change in his portfolio, and alerts salespeople and traders to trading opportunities.
Salesmen typically have relationships with 10 to 15 customers, said Jim Perrello, chief operating officer at CodeStreet. The salesperson’s job every day is to meet his customers’ needs, either by pitching new ideas to move securities, or if the client wants to make a trade, by getting that done with the traders.
Sales teams are under pressure because customers have direct access to far more information than they did a few years ago. You don’t keep your customers happy just by buying them the occasional beer, one salesman said ruefully. Now that the buy-side systems are as sophisticated as the sell side’s, salespeople have to add intellectual value to the numbers by offering their clients intelligent suggestions.
Buy-side customers, whether pension plans, hedge funds, or insurance carriers, want good ideas from the firms they deal with. By using software that acts as an extension of the salesperson’s thinking, said Pein, a salesperson can engage in an intelligent discussion.
“We let the computer suggest reasons for having a conversation. What makes you money are high value sales calls. If your people feed valuable information to your clients, the clients will do a ton more business with you,” Pein said.
CodeStreet is adding new functionality such as a high-level filter, added the trader. If a customer wants five-year paper rated single A or better with a $500 million minimum original deal size, a salesman can put that into the system and see if the firm owns anything which meets the customer’s criteria.
If the firm doesn’t have anything to fit, the salesman can use TRACE, the NASD’s Trade Reporting and Compliance Engine, where firms report their bond transactions with price information.
“Since the information is publicly available, there are various entities that manipulate the data and store it for us. So theoretically I can see where the GE 09s have traded,” said the trader. “I may take this high-level filter and apply it against TRACE to find bonds with these characteristics that are Libor 30 or cheaper. Are there any bonds? And then I can know which to target. I can go back to the CodeStreet portfolio system and see who owns them, and then the salespeople are alerted to try to bring the bonds out.”
Eighty percent of CodeStreet’s value is to generate ideas, he added. His firm plans to recreate its legacy trading system with new code that will work within CodeStreet.
“Eventually CodeStreet would be our platform for marketing, accounting, analytics and risk management,” said the trader.
“They have very, very good graphics. People look at it and say it is very clear and easy to work with all day.”
www.codestreet.com
DESIGNING USABILITY
For a software startup, CodeStreet has a large design group – five user interface design specialists who work to make its screens deliver information to traders in a manner that lets them take in the information quickly.The reward for great design is to go unnoticed. Unlike the iPOD, whose cool factor still draws appreciative glances, the better CodeStreet’s design team does its work, the less likely users are to notice.
Well, except for the heat maps.
“We try to take feedback directly from users and then, working with the product manager, we do some quick sketches of what the feature would look like,” explained Edward Guttman, design director at CodeStreet. Then they create a static screen, without any coding behind it, that they can present to the trader who asked for the change.
“That makes it very tangible for him. He can see what he is going to get and then he can point to things that he likes or doesn’t like, and suggest additions. We do this very quickly,” said Guttman. “When you work on a software interface using the direct feedback of the people who will have to work with it eight hours a day, that makes a huge difference in the end.”
The design team has done a lot of thinking about features, how traders work, and the best workflow, he added.
“We also pay a lot of attention to data visualization. Traders are used to seeing a lot of things at once, a lot of colors, a lot of action happening on the screen. We have made an effort to focus all this action and use visual techniques to highlight the right information at the right time, which they appreciate. We get uniformly good responses to our screen designs.”
To help users spot opportunities, the designers incorporate heat maps showing with shades of gray the number of matches by query, trade, and portfolio.
“If you see a lot of dark gray across three columns, that means it is something they should pay attention to.” It’s not the usual tool that traders are accustomed to, but once the heat map concept is explained, they pick it up readily and find it speeds up their work.