Omgeo, a software company specialising in financial workflow products, is to start testing a web-based trade allocation management tool next month.
The product aims to eliminate the need for fax and telephone communications in the post-trade matching process between thousands of investment management firms and brokerages.
Representatives from Omgeo said its Allocation Manager system, which is based on XML and Java 2 Enterprise Edition and runs on BEA Systems' WebLogic servers and Sun Microsystems' Solaris Web servers, cost less than $1m to develop and will be offered free of charge to investment managers.
A subscription to the online trading blotter includes Omgeo's Alert system, a database that houses industrywide trade settlement instructions, and the Oasys TradeMatch engine, which electronically matches settlement instructions between investment managers and broker/dealers.
Broker/dealers complain that manual handling of post-trade information opens the process to errors, which take time to track down and correct. Manual operations are also considerably slower than electronic methods. Omgeo estimated that the average manual trade costs a broker/dealer about $16 and that the same trade processed electronically costs about $4.
Omgeo chief executive officer and president Adam Bryan said that an additional 21 brokerage houses have signed up for the service, joining its original financial backers UBS Warburg, JP Morgan Chase, Morgan Stanley and Credit Suisse First Boston.
Allocation Manager will be generally available sometime in May or June.