Alfred, you are a proven business leader and technology entrepreneur who has dedicated almost 20 years to working in the global capital markets. What keeps you so enthusiastic about the industry?
Thanks for that it is very kind. I’ve always been drawn to creating new ways of doing old things – whether it’s in financial markets or cooking and to have fun doing it.
I’m lucky to be surrounded by truly talented people who share the same approach. Change is occurring in our industry at an ever faster pace. There will always be more to do and it has been exciting to be a part of it for the past 20 years. I’m incredibly proud of our entire team at Portware and our acquisition by FactSet speaks volumes to the quality of the people of Portware, and to the innovative products and capabilities this team has spent years developing, advancing, and refining. Looking ahead, we are excited to continue transforming the way investment ideas are analyzed, communicated, and executed. There’s alpha to be had and we want to help our clients create and retain it.
You were appointed CEO of Portware in 2012. Why is the firm such a good fit for your own leadership style, business ideas and strategic vision?
Portware was in possession of the three main ingredients for success: great people, blue chip client base, and a great product. It just needed a fresh strategy that leveraged those strengths to create explosive growth. I met the executive team as well as the folks writing the code day in, day out, and knew they had something special.
I am a firm believer that you can generate strong growth – even in a challenged market – with innovative products; and that a company’s odds of success improve significantly when they build for themselves a market niche with clear differentiation. It’s about finding those white spaces where you can really stake your claim. I saw a chance to do just that with Portware and I’ve dedicated nearly the last 5 years to creating that uncontested space where Portware operates as a category of one.
Please tell us a little about the other key members of your executive team and the roles they play within the company.
Scott DePetris, our President and COO, is a co-founder of the firm and its best ambassador. I’ve relied on his leadership and connection with our employees and executives. Sarath Chennareddy is our Global Head of Engineering and oversees both development and implementations. It’s hard to overstate just how critical he and his organization are to Portware’s success. John Adam is our Global Head of Client and Product Strategy and provides a key link between how clients use Portware, how they want to use Portware in the future, and the development roadmap to bring those two together. Paul Clarke, our Global Head of Sales, runs the leanest and most productive sales team in the industry. Chris Matsko oversees our FX Trading Services, working closely with John, Sarath, and Paul to bring in new business, service existing clients, and expand our FX capabilities.
The last few years have proved to be a challenging operating environment for many FinTech providers but Portware, whose managedassets now total $10 trillion, seems to have bucked that trend during this period and seen substantial growth. What factors do you attribute this to?
A clear and transparent strategy, brutally honest communication and a winning attitude. Five years ago, Portware didn’t really have a focused target audience. The core of our software is, without a doubt, useful for any player in electronic trading, in any asset class with a critical mass of electronic liquidity. As a result, we sold to virtually every type of institution. One of the big changes I ushered in was to focus our target market: we now conduct nearly all of our outbound prospecting and selling with global and complex multi asset managers – identifying the segment that could benefit the most from our software, we’ve also been able to focus our development efforts on serving that market, creating a virtuous cycle of sales and product development that has brought us where we are today.
Portware develops brokerneutral, automated trading software for global equities, futures, options, FX, and fixed income. What range of clients now benefit from your services?
Our core is Tier 1 global asset managers – typically firms trading all asset classes across a global network of trading desks, overseeing AUM of $100 billion and higher. We do also partner with a number of firms outside this core, most notably sophisticated hedge funds who have outgrown less bespoke systems.
Portware works in partnership with clients to create highly integrated solutions to streamline workflow and increase operational efficiencies on trading desks worldwide. In what ways has the evolution of the capital markets over the last few years and changes to the way they operate under new regulations, increased demand for your services?
Buy-side firms need scale, efficiency, performance, and the ability to demonstrate best execution and fulfillment of fiduciary responsibility. Portware promises our clients all of these things. In terms of scale, we onboard new traders, desks, asset classes, and counterparties on a daily basis. On Brexit+1, we handled nearly 4 times our normal trading volume and had one of our quietest days on the Support desk that I can remember. Integrating a global trading desk on a single technology footprint, being able to hand open trades off between desks as trading opens and closes around the world, trading multiple asset classes in a single platform – these speak to the efficiency Portware helps our clients realize. When it comes to performance, the Portware EMS is unrivaled, especially in equities and FX.
Your flagship product, Portware Enterprise is trusted by the world’s largest asset managers. It has been described by some commentators as the first and only “thinking” execution management system (EMS). What do they mean by that?
What it really comes down to is machine learning (ML) and artificial intelligence (AI). Time and time again, the feedback we’ve received from the market is that the most advanced ML and AI vendors today lack a deep understanding of trading, and most trading software providers are only scratching the surface in ML and AI. About 5 years ago, Portware acquired the technology assets of Aritas and with that, interwove AI into the EMS, creating the Portware “Brain.” Today, our Alpha Pro product gives pre-trade strategy recommendations and can be used to automate algo switching and optimization as a trade unfolds. Clients begin with an alpha profiling exercise, whereby orders and trades are compared against market conditions and alternative strategies that could have been used - based on the data in the market at the time - to determine optimal linkages between portfolio manager investment theses and in-market execution. Hence, the “thinking” EMS.
What important advantages does the platform’s open architecture have?
There are really two streams of benefit here. First, we are able to integrate with any and all proprietary and third-party systems (in-house systems, data streams, OMSs, compliance engines, TCA providers, etc.).
This architecture is also yielding significant benefits in integrating with FactSet both for clients, and for our shared vision to be to go-to FinTech provider for the entire portfolio lifecycle.
Another of your key products, Portware FX offers a real-time, aggregated view of the entire FX marketplace through a single, fully customizable, brokerneutral front-end. What makes it such a compelling and complete FX trading solution?
I think you did a great job encapsulating it in your question! That’s really the crux of the benefit in our eyes creating a single, virtual order book where all of a buy-side’s counterparties are available for trading, by RFQ, all-day stream, and RFS. We support all manner of custom trading strategies, automation, alpha generation, counterparty rotation, built-in analytics, and more, all with the benefit of tighter spreads for our clients.
Many readers of e-Forex are high volume, high frequency, algorithmic currency traders. What solutions do you offer for them?
The entire Portware Enterprise EMS is built for speed, scale, and performance. We support both our client’s proprietary FX trading algos and strategies, as well as a layer of intelligence within our system that can complement any our clients bring to the table.
Our FX clients range from pure hedge FX traders all the way to pure alpha FX traders, and everything in between.
You have described Fixed Income Trading as a “shiny red ball” that everyone is chasing. What attributes does Portware have that you see as essential to winning that particular race?
First and foremost, our people. I’m incredibly fortunate to work with a group of people so focused on excellence in client service, on thought leadership, and on coming up with ways to expand our functionality and value into new workflows, new regions, and new asset classes. Fixed Income has long been on our minds, and we’ve built a few novel features for clients who’ve prioritized electronic FI trading so we’ve got the experience within Portware as well. The most exciting development, however, has to be our acquisition by FactSet. FactSet is a leader in the fixed income analytics space and possesses an unmatched wealth of knowledge, experience, and clients to engage and partner with on setting the pace for further electronification of FI.
In late 2015 Portware became part of FactSet Research Systems. In what ways do you think this new collaborative environment where many resource constraints can be undone will provide exciting opportunities for Portware to develop a new range of products for the industry?
As someone who is passionate about the betterment of the industry, I always like to see transformative M&A go well. In our case, it’s been a real joy to watch the past year-plus unfold.
The collaboration across our firms in terms of product development, engineering, and sales & service has been remarkable.
We’re able to revisit plans that have been shelved in the past and extend our vision to new areas, help FactSet round out their vision for servicing investment professionals at every stage of the investment lifecycle, and really dig in to find those white spaces that make one plus one equal three.
Portware has offices in New York, London, Hong Kong, and Hyderabad. What plans do you have for breaking into new markets and extending your geographical footprint over the next few years?
One of the great benefits of being acquired by such a significant global player is we multiplied our geographical footprint by many times the moment the acquisition closed. As such, we have no plans to open any Portware-specific offices in the future. Instead, any expansion we are doing in this regard will be in lock step with our new corporate parent.
Portware has now been operating for 17 years. That’s a long time in this business. In what ways do you think the firm has succeeded in changing the trading technology landscape forever?
In a sentence, we’ve demonstrated the benefit of having neutral, third-party, trade execution software. Because we are not beholden to any one bank’s strategic decisions, R&D constraints, and so on, our sole incentive is to develop software that delivers maximal value to its users. We’ve shown that a (relatively) small team unified around a central guiding principle can accomplish anything.