Execution Platform Development – Part 1

It’s a cold autumn morning in Zurich, and the financial district is buzzing with anticipation as it waits for the European markets to open. The Vontobel B21 pavilion slowly begins to emerge from the fog like a lighthouse. Towering over nearby buildings, B21 gazes toward Paradeplatz, deep in thought as the US elections unfold. Roger’s Development team expects an incoming flood of orders as the markets react to the election results ...

... As the spectacle is set to unveil, the Execution Platform will take center stage. With its ability to handle cross-asset orders and access 125 trading venues, it will play a central role in guaranteeing best execution for orders sent by clients.

Once Roger enters the B21 building, he proceeds to the 2nd floor towards the execution trading desk. As he approaches the desk, he is warmly greeted by his team member Tobias. Tobias has been performing various system checks since 7:00 a.m., as he was tasked with early operational duties for the day. The aim of early duty on operations is always to ensure that the Execution Platform is primed for the various European market openings. These checks are crucial to ensure optimal execution for Vontobel clients over the next 24 hours of trading. Because markets across the globe follow the rising sun, major financial hubs in Asia, such as Hong Kong, Singapore, Tokyo, and Shanghai, have already been active on the Execution Platform.

The trading activity for the past seven hours in Asia has already justified the team’s anticipation of a busy day. Today could potentially match record order volumes seen during past significant events, like the COVID-19 pandemic, the Ukraine conflict, and Brexit. Those events proved to Roger that the execution platform can comfortably handle more than 70,000 orders per day, an exceptionally high number. Over 98 percent of these orders are processed in a fully automated manner and without any manual intervention—commonly referred to as the straight-through processing (STP) rate. The exceptionally high STP rate enables the execution desk to seamlessly manage the high volume of trading activity.

Roger’s attention shifts to the Algorithmic Platform and specifically to our co-located home market of Switzerland, which is about to start trading as 9:00 a.m. quickly approaches. The Algorithmic Platform was first introduced more than eight years ago. What started with just a few vanilla type TVOL and VWAP strategies has now grown to 10 algos servicing specific requirements from our clients. Roger was instrumental in implementing the algo platform in response to the growing client demand for more advanced order-execution capabilities. On top of that, Vontobel was hungry to gain a competitive edge over its peers in the execution area. Having a flexible solution that offers tailor-made algo strategies to clients was the way forward.

As Roger hovers his mouse over the algo orders during his routine checks, his team’s chat starts ringing melodically. It’s a call from Benjamin, who heads the Symmetric Derivatives division at Vontobel. Eight years ago, Benjamin led the implementation of the first algorithms on the Algo Platform and played a key role in driving its establishment. He now also uses this exact platform in his division to manage his operations in his new role: forming a strong cross-divisional collaboration between the Transaction Banking and Structured Products units. In our team, we actively encourage cross-functional sharing of knowledge between teams and departments within the organization. We firmly believe that this strategy directly contributes to the overall success of Vontobel. Maximal value is realized by maintaining transparency, accessibility, and collective learning, which cultivates an environment in which continuous improvement can thrive.

The purpose of Benjamin’s call was to briefly discuss a change to one of his automated strategies in order to optimize the handling of the high-volatility situation created by the US elections. Thanks to the forward-thinking implementation of the algo framework by his team, Roger can roll out the change into production seamlessly and in a safe way. The strategy of purchasing software frameworks, as opposed to buying static products, plays a significant role in efficiency. This approach allows Roger’s team to effectively meet client-specific needs while ensuring scalability and a manageable use of resources.

After ending the phone call, Roger notices out of the corner of his eye that a meeting alert has popped up. He then quickly rushes off to the scheduled room to meet Julien, with whom he needs to discuss the details of a vendor trip to Paris.

Julien and Roger proceed with their meeting and plan the agenda for the Paris trip. Discussing road maps and identifying strategic objectives from both sides are vital and need to be continuously discussed and refined for a healthy and productive relationship. A prime example of such successful collaboration was the extension of the existing cross-asset offering of the Execution Platform, which five years ago consisted of equities, ETFs, bonds, funds, and FX. At that time, an electronic ETD solution was missing, which led to a significant number of manual interventions. With Julien’s in-depth knowledge in the field and adept project management skills, he was able to efficiently kick off the project, delivering a viable solution in just three months.

It is essential to treat vendors as partners, rather than mere commercial entities, in order to foster strong, collaborative relationships. Having such a relationship with efficient, reliable vendors is the key to the success of any venture. This is exactly how Julien successfully oversaw the integration of a brand-new system for efficiently managing ETD instruments and the order flow, completing the Execution Platform’s asset offerings. This solution not only enhances our clients’ ability to electronically route orders from various systems or networks for an extended range of markets, but also incorporates a suite of sophisticated OMS features. These include high-touch features such as creating and handling ETD strategies, creating composite orders, splitting orders, and handling uneven rolls. Embedded algorithmic trading capabilities further allow traders to work more efficiently, significantly reducing the need for manual input processes.

After finalizing all the necessary details for the vendor trip, Julien returns to his desk. He notices a missed call from Michael, Head of Execution Equities & Derivatives. Julien returns the missed call, assuming the call is related to one of the existing ETD flows. As Michael proceeds to explain, Julien is surprised to learn that the call was related to a completely new ETD flow requirement for a particular client. Specifically, it concerned facilitating the process of block trades on ETD instruments through our order management system. After a short brainstorming session on the call, leveraging the knowledge Julien has concerning the possibilities of the ETD framework, he immediately comes up with a clear solution of how to proceed. Essential to the solution is in-house development, which is available within the Execution Platform. This enables us to deliver immediate value to clients by providing solutions that are specifically tailored to their needs. Julien also spots some challenges but is able to provide Michael with an estimate as to when this could be implemented. Julien would need to liaise with various stakeholders involved in the process, such as the Trade Middle Office and Back Office teams, to streamline the specific process. He confirms that the request will be available with the next release scheduled in two weeks.

An important part of the solution would require development specifically in the OMS, which Tobias leads. Julien immediately attempts to reach out to Tobias to see if he is available to discuss the details. Tobias answers the phone, but promptly explains that they should postpone the discussion, as he is on operational duty and is investigating production matters.