Open Source Gets Into Wall St. Back Office

Tough times for the financial services market doesn’t mean tough times for all of the software vendors that support them. Open source trading platform software developer Marketcetera, in particular, sees an increasing number of opportunities for its technology.

Marketcetera is now rolling out new back office services for financial services users that leverage Marketcetera’s open source Automated Trading Platform. The goal is to give traders an open platform that they can customize without being locked into a proprietary code base.

“It makes a whole lot of sense to provide an application platform for trading systems that is provided as open source,” Graham Miller, CEO of Marketcetera, told “The primary advantage being organizations get the flexibility and control that they don’t have from proprietary solutions but don’t want high cost and time to market of completely custom solution.”

Marketcetera develops software on which organizations can build trading applications. Financial services firms can build systems that enable traders and portfolio managers with real time market data as well as the ability to execute trades.

Miller noted that to date, Marketcetera has focused on the buy side of financial services with hedge funds and institutional investors. As the result of a partnership with software integrator dbConcert, Marketcetera now is also able to service the sell side, which includes broker dealers. Miller explained that Marketcetera can now offer sell side users visibility into order flow and back office integration.

The Marketcetera platform is licensed under the GPL open source license, which some in the technology market have seen as an element of risk. Miller admitted that there is an education gap that needs to filled when it comes to open source and the GPL in the financial markets. It is a gap that is getting to be less of an issue as open source become more tightly ingrained in the core of the US financial system.

Miller explained that Marketcetera was designed such that a hedge fund could use the technology and not be required to open source all of their secret trading algorithms.

Open Source in financial markets has gained more acceptance in recent years, in particular the New York Stock Exchange (NYSE) currently runs Red Hat Enterprise Linux for its trading platform. Miller noted that adoption of open source anywhere in the financial services stack is beneficial to Marketcetera, as it helps with exposure and education overall.

“It’s great for us to see Red Hat making inroads,” Miller said.

Beyond the education issues related to open source, Miller admitted that the Marketcetera platform has another challenge. Currently, the platform requires a certain amount of technical proficiency to get up and running. That’s where Marketcetera’s paid professional services come in to help. However, a key goal for Marketcetera will be to make it easier to implement, since time to market for a trading system is a key decision factor for financial services.

Overall, Miller is of the opinion that in tougher economic times, open source can do better than proprietary competitors.

“The expectation is that people are looking to more closely align their costs with the value they derive from a solution,” Miller argued. “Really the open source model does that better than a proprietary solution, where you’re paying an upfront fee before you even know if an implementation will work.”

While some see only debt and despair in the current economic crisis gripping Wall Street, Miller sees a silver lining in it for Marketcetera.

“We’re seeing organizations still willing to work on new systems,” Miller claimed. “We’re seeing people leaving financial institutions like Lehman Brothers or Bear Stearns and starting new organization that need new installs. We’re seeing a lot of opportunity in all this doom and gloom.”

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