Omgeo this week will start beta-testing a web-based tool aimed at boosting straight-through processing of trades between brokerages and investment managers by eliminating the need for the firms to communicate via fax and telephone to allocate shares.
Boston-based Omgeo, which offers an automated trade-matching service, announced the allocation management engine last week and said it should be ready for commercial release by the middle of the year.
The tool is an end-user portal based on XML and Java 2 Enterprise Edition and will be run on Solaris servers with BEA Systems' WebLogic application server software.
Omgeo officials said that independent investment management firms will be able to use the Allocation Manager portal free of charge. The company will charge brokerages about $1 for each trade they process via Allocation Manager.
David Oxenstierna, an executive director at Morgan Stanley in New York, said that could add up to thousands of dollars a day. But he added that he was willing to pay the fee to streamline the processing of transactions with investment firms lacking automated trade-matching capabilities.
"To us, [using faxes and phones] is an inefficient way to process trades," Oxenstierna said. "It represents [added] operational costs and the risk of mishandling things."
Omgeo developed Allocation Manager with financial backing from Morgan Stanley, Credit Suisse First Boston, JP Morgan Chase and UBS Warburg.
Adam Bryan, Omgeo's president and chief executive officer, said 21 other brokerages have signed up to use the portal.