FIA EXPO 2022: Interview with Ray Tierney, President of Broadridge Trading and Connectivity Solutions

Broadridge Trading and Connectivity Solutions was born out of the acquisition of Itiviti, completed in May 2021. The rebranded business enables simplification and streamlining of front and middle office functions, powering connectivity and multi-asset trading across global markets.

Ray Tierney told FinanceFeeds Editor-in-Chief Nikolai Isayev that Broadridge was attending the FIA Futures & Options EXPO 2022 this year as a means to enter the exchange traded listed derivatives business.

The interview focused on the revamped Broadridge solutions for the buy-side and sell-side at a time when customers look to lower their vendor risk by engaging with ‘all-in-one’ packages.

Ray Tierney arrived at the FIA EXPO 2022 in Chicago after well-traveled several weeks that included stops in Portugal, Sweden, Romania, and Japan, which begged the question of how many frequent flyer miles he has earned. “I can’t even count, they’re so high!”

“Not a lot of players in exchange traded listed derivatives”

Broadridge may be quite new to the exchange traded listed derivatives business, but it is surely one of the best-known fintech companies in the world. The publicly traded firm headquartered in New York has a market cap of $17.5 billion and its shares are traded at the New York Stock Exchange under the BR ticker.

Historically, Broadridge has operated primarily in the post trade world across fixed income and equities. The acquisition of Itiviti, completed in May 2021, has expanded its scope and reach to the front and middle office, with connectivity tools and post trade matching solutions as well as expanding its reach internationally.

The move was highly complementary to Broadridge’s vision, which is now working on a standalone solution for the middle office and developing go-to market plans and significant investment in client connectivity, while expanding into new asset classes and getting into exchange traded listed derivatives.

“Compared to equities space, there are not a lot of players in the exchange traded listed derivatives space”, said Ray Tierney, who concluded it was “an opportune time to take a step towards leveraging Broadridge Trading and Connectivity Solutions’s FIX gateways, connectivity and LT solutions, with a high touch order manager system, specifically geared towards exchange traded derivatives / futures and options players.”

All in one solution

The President of Broadridge Trading and Connectivity Solutions, formerly Itiviti, noted, that as part of the firm’s integration with BROADRIDGE it has opened the doors most notably to the principal risk trading and market making platform world through its highly innovative and disruptive platform, called TBRICS, which is now being leveraged to enhance market making capabilities in fixed income, options, equity derivatives and ETF’s, along with a continued investment into the platform is to provide greater resiliency and stability.

“In our AGENCY OMS business we are expanding regionally for equities across North America, UK and in APAC over the next couple of years.”

Other priorities include building out our global standalone Middle Office solutions, Managed FIX Services and exchange derivatives, as we continue to expand our reach across asset classes.

NYFIX, BTCS’s flagship broker-independent, vendor agnostic FIX order routing network, will now support new asset classes besides equities. Tierney pointed to fixed income, swap certifications and crypto as the new post-trade matching capabilities on NYFIX. The vast synergies across Broadridge includes Broadridge’s Investment Management Solutions (BIMS) and the Broadridge Wealth Platform, an open, component- based ecosystem that redefines wealth management technology.

Broadridge’s goal is to address firms’ needs of reducing vendor risk by acting as the one single vendor who can bring in the back office, middle office, and front office across asset classes globally.

“Generating value is about lowering implicit costs”

Today, it is critical to understand your implicit costs, how to measure them and then attempt to trade in a matter that reduces these costs and friction. “Factoring spreads, market impact cost, opportunity costs, delays, picking the right broker, the right algo, the right strategy…it all comes down to implicit costs”, said Tierney, reminding us of market data from 10 years ago that concluded that 87% of the entire transaction cost was implicit.

“In execution and liquidity management, generating value is about lowering implicit costs”, Ray continued.

Investors can evaluate how well they and their brokers have executed their strategies. Exchanges want to analyze transaction costs to determine how liquid their market is; Brokers want to evaluate their execution performance to market themselves to clients. Regulators want to calculate transaction costs to help in monitoring the performance of the exchanges and change policies accordingly to reduce transaction costs on exchanges.

“Broadridge Trading and Connectivity Solutions (BTCS) is highly complementary to Broadridge industry-leading post-trade product suite and other capital markets capabilities as it significantly brings value to streamline front to back trading stack, increase efficiencies and operations, reduce operational risk and vendor risk, and optimize the balance sheet through the utilization across equities, fixed income, exchange-traded derivatives and other asset classes”, Ray explained. We are all about modernizing capital markets through component or modular based architecture which supports smart growth. This open, flexible architecture will for allow seamless integration with legacy technologies.

“If you’re not judicious about your technology partners, you’ll be spending money that you could be saving”, Tierney reminded the audience as he called for smart growth.

The industry veteran also spoke about the increasing cost of market data, which is causing some upset from consumers and a reaction from regulators, including the Securities and Exchange Commission, which is attempting to rein that in and address the lack of governance and transparency, namely in pricing across client types.

“Data is gold. It is like finding oil”, he said, admitting that the issue comes down to supply and demand, but there needs to be reasonable pricing with increased transparency around it to reduce the noise and friction surrounding it today.