THE BUY SIDE
For portfolio managers, execution desks and compliance teams, Algomi Honeycomb turns complex data systems into actionable knowledge, helping investors trade with increased speed and success. Honeycomb is not a trading platform, it is an information network that helps to provide liquidity in the bond market. Honeycomb sets a new standard in the way dealers market to the buy side, recognizing that their value is now derived from their distribution network not their balance sheet.
At present, buy side firms utilize their OMS to manage inquiries and then either manually execute them on electronic venues or, for larger or more illiquid trades, discuss with their banks on the telephone. Algomi establishes firewall-friendlysecure lines that connect the OMS with the Honeycomb software.
Honeycomb is a Java based application hosted by Algomi aimed at applying business rules dynamically to filter, transform, aggregate and route content from multiple sources, primarily sell-side firms, in a contextual fashion to buy side traders.
Honeycomb promotes a reactive, modular and distributed architecture. The system is built on asynchronous messaging between components that enables loose coupling, isolation and location transparency. It also leverages a distributed in-memory data cache for caching and performance improvement.
Honeycomb introduces a new dimension of data, namely insight into bank distribution capability. Targeted not broadcast and timed to perfection. Installed within each bank, inside compliant trading processing systems, this verified data can be trusted as accurate.
Honeycomb displays the investor’s portfolio and planned transactions in a visually engaging, informative and intuitive form, by allowing the investor to view information shared with them from multiple sell side firms, without revealing their intentions until they are ready to open a communication channel. The reduction information leakage gives confidence in making just one call on a sensitive trade. This reduces market noise associated with multi-dealer enquiries. Once the investor has revealed their cares to the chosen bank, the sales contact is notified internally as to exactly which other salespeople have clients who are most likely to be the other side of the trade, again reducing the number of potential leakage points within a counterparty.
Honeycomb amalgamates information from a range of sources: runs, axes, flow and enquiry color and the data is provided and updated real-time. Execution dealers are able to run a silent search across their counterparties’ franchises to better understand who is best connected on a trade-by-trade basis. New flow or trade color at each bank is constantly monitored for relevance and pushed to the buy side. Execution remains voice-based between investor and bank, as is appropriate for large sensitive block trades.
Honeycomb offers full Order Management Systems OMS integration and provides a detailed audit report recording flow of price and liquidity discovery from the moment an enquiry is loaded. Every button click on the Honeycomb Network is tracked and pulled into a report that demonstrates the process undertaken by the buy-side trader, and the information they received that led them to their final decision around execution. This means a dealer is able to prove that a best execution process has been followed precisely on those trades where is it hardest to demonstrate.
This provides the buy side firm with a unique and powerful display of information on their portfolio. Honeycomb provides the data and market insight vital to selecting the right banks and the right time to trade. The investor is able to deal in size, seek best execution, and remain discreet in the market.
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