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Introduction

A single-dealer platform (SDP) is software used by an investment bank dealing in the capital markets to deliver trading and associated services via the Web[1]. The function of an SDP is to integrate pricing, liquidity, and pre-sales content from multiple sources within a bank and provide access to them via a single user interface. It is thus both an integration platform and a delivery platform.

Although the term SDP is sometimes used to describe an entire etrading suite, it properly refers to the integration and connectivity layer that sits on top of trading, pricing, risk management and other back-end systems[1][2].

A key aspect of an SDP is that it merges information and services both within and across asset classes. An SDP will typically combine elements such as pricing, trading, research and technical analysis within each asset class, and then draw together multiple asset classes.

Although in principle SDPs are applicable to all types of tradable security, to date they have been used mainly in OTC markets such as foreign exchange and fixed income.

Single-dealer platforms should not be confused with single-dealer portals. A single-dealer portal is a stand-alone service provided by a bank for trading a specific set of products in one asset class, and is usually narrow in scope. A single-dealer platform, by contrast, is a broad layer of software that allows a bank to offer integrated information and trading across most or all of its businesses.

Single-dealer platforms are sometimes also referred to as "single bank platforms." The terms are usually interchangeable.

History

In the early 1990s, the replacement of voice trading by electronic trading in the OTC markets created a requirement for banks to provide screen-based trading services to their clients. This was frequently achieved mainly via intermediaries, known as multi-dealer platforms, that were formed to deliver pricing and trading from multiple banks.

Early on, however, banks such as Barclays Capital and Deutsche began offering single-dealer portals[3], mostly either via private pages on Bloomberg or via the Internet. Offerings of this kind enjoyed rapid success, and by 2005, despite vigourous competition from multi-dealer platforms, surveys showed the majority of clients relying on single-dealer rather than multi-dealer offerings[4].

Initially, most of these single-dealer offerings took the form of stand-alone trading screens that offered trading in a single family of instruments. Many banks developed a large number of such "point solutions," often having nothing more than branding in common. Since the mid-2000s, however, users have such systems have been expressing a need for multiple asset classes to be tradable through a single platform, rather than having to log into many services[4].

Banks have responded to this need by embracing the SDP concept and starting to build more integrated, multi-asset offerings. Initially these were built from scratch using low-level components. More recently, sophisticated SDP frameworks such as Caplin Xaqua have emerged to allow complex offerings to be built more quickly[5][6].

Current state

In the absence of any established frameworks, early SDPs were usually built in an ad-hoc fashion, and most used Java applets to deliver a user interface via the Web. More recently the use of applets has declined, and the focus has shifted to Rich Internet Application (RIA) technologies for delivery. At the same time, banks have begun to recognize the value of SDP frameworks to provide abstraction layers when combining services from multiple asset classes.

There is currently considerable debate over which RIA technology is most appropriate for SDP delivery, with native Web applications, Flash and Silverlight all attracting adherents.

After a period in the mid-2000s in which SDPs appeared to be giving way to multi-dealer portals, their use is now growing rapidly across many asset classes[7][8][9].

References

  1. ^ a b "So what is a single-dealer platform?" SerenDiPity, 24 Feb 2010
  2. ^ "What an SDP isn't," Finextra, 19 Mar 2010
  3. ^ History of Deutsche Bank Autobahn e-trading offerings
  4. ^ a b "Barclays Capital Ecommerce Survey Shows Preference for Single-Dealer Platforms and Demand for Multi-Asset Class Trading Capabilities," 2006
  5. ^ "Nomura Deploys Xaqua as Single-Dealer Front End," Sell-Side Technology, 16 Oct 2009
  6. ^ "Crédit Agricole live on Xaqua for fixed income trading," Banking Technology, 25 May 2010
  7. ^ "Single-Dealer Portals Offer Live Prices to Debt Buyers," Securities Industry News
  8. ^ "Single Dealer Platforms—Where are we?" Tales from a Trading Desk, 9 Jun 2009
  9. ^ "My word, my bond", Banking Technology, 12 Feb 2010
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