Authorise participants (APs) are using a myriad of individual trading systems which is causing errors within data and restricting the growth of business as a result, according to Jon Butler, CEO of Velox.
The front office technology solutions provider hopes to resolve these issues by delivering a single streamlined workflow which can then introduce specialised tools to solve problems specific to ETFs such as rebalances, creation and redemption.
This will enable next generation functionality and improve the productivity for both user and developer.
Velox primarily focuses on improving the speed and costs for businesses which are suffering from fragmentation legacy estate.
Butler (pictured) highlighted two main issues within the Delta One and ETF trading space.
“There is a lack of specialised tools for order management systems, analytics, workflow and industry middleware, etc. and at AP’s desks have to make use of a myriad of individual systems to get their job done,” Butler said.
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The APs require a specialised system for each trading vehicle such as futures, stocks and derivatives to name a few.
As a result of ETF traders having to use a collection of systems, there are a large number of gaps which need to be managed on other software such as Excel.
Butler added: “It requires a lot of manual work to operate, it is error prone and it makes it hard to scale the business and even harder to innovate or adapt.”
Prior to the launch of Velox two and a half years ago, Butler was a managing director at Goldman Sachs where he held roles including head of equities trading technology and head of operations technology.
The founders of the platform have spent over 20 years building front office technology for investment banks. They, therefore, have developed Velox to be the tool they “always wanted but never had”.
The Velox offers specialised tools to traders to solve specific problems for ETFs such as rebalance and creation and redemption.
The CEO explained: “Because of the adaptability of Velox platform it also then gives ETF businesses the ability to innovate rapidly going forward which is vital given the evolution happening in this product.”
Another issue Butler highlighted is how a lack of good reference data is a problem for capital markets as a whole, but the ETF market feels it particularly acutely.
This is because of the exposure to a massive universe of indices, ETFs and myriad of providers who have their own interpretations of definitions. This issue is still yet to be resolved, however.
Moving forward, Velox hopes to develop partnerships to further offer its solutions to technology departments.
Butler concluded: "Velox is a technology company and our core product is a software development tool that solves problems for technology departments.
"Our partnerships, which we are finalising, will allow us to build and provide products solving problems for various businesses."