By Karen Spinner May 1997 Derivatives Strategy
Magazine
New players continue to swarm into the market for derivatives and risk management
systems. Consultants at established firms are jumping to form new, more specialized
groups. Established data vendors are building up relationships with new software firms.
Software startups are beginnning to target specialized markets underserved by the larger
vendors. And established international vendors are expanding into new markets overseas ...
Xyris: Options for the Masses
How a boutique consulting firm launched an international options product,
with a little help from Reuters.
Xyris Software Inc., a New York-based boutique software firm founded by three partners
in 1991, has always kept a low profile. "Our expertise in financial mathematics and
real-time Windows applications is particularly appropriate to fill the needs of traders
who want to balance high-speed performance with ease of use," says Maurice McGinley,
one of the firm’s partners. Some of Xyris’ recent projects include building a
convertible bond system for Bear Stearns and an ADR trading system for NatWest Capital
Markets. The firm has also built custom applications for Bloomberg and Reuters.
After spending five years on trading desks learning what traders need and want from
their desktop systems, McGinley and his colleagues realized they could offer something
beyond custom applications. "We noticed that there was a gap in the derivatives
software market. It’s been hard for traders to find a high performance options
pricing application that was also easy to use. The alternatives are all clumsy, or based
on outdated technology." he says. The result was XyrisOption, a desktop Windows
application capable of pricing and analyzing exchange-listed equity, commodity, currency
and interest rate options around the globe. "If it’s traded on an exchange, we
price it," McGinley says.
XyrisOption was built with an eye on the competition. "In terms of features, we
compete against MicroHedge; in terms of performance, we compete against MarkeTrack. In
head to head comparisons, traders are choosing XyrisOption." According to McGinley,
future development plans include adding risk management and advanced position-keeping to
the product, to make it even more appealing to large brokerages and clearing houses.
How does a small shop orchestrate the production, distribution and support of what is
essentially a low-price, "mass marketed" product? According to McGinley,
they’ve done it by developing a relationship with Reuters. "We provide the
market expertise and real-time technology, and Reuters looks after the marketing, sales,
and 24-hour customer support." There are benefits for XyrisOption customers, as well.
"Reuters has priced our product aggressively," says McGinley. In the Americas,
customers can buy the software directly from Reuters. Elsewhere, XyrisOption is available
direct from Xyris.
The product has found its way into the hands of traders from Toronto to Buenos Aires;
from Chicago to London. The firm is also involved in discussions with a number of
exchanges that may soon use XyrisOption as a pricing tool on their trading floors. A free
trial version of the product is available at Xyris’ Web site. This module comes
complete with on-line documentation. Given Xyris’ development relationships with
Microsoft, an ActiveX web-compatible version of XyrisOption is not far-fetched in the
least.
©1997 by Derivatives Strategy and Tactics LLC, 153 Waverly Place,
Suite 1200, New York, NY 10014, 212-366-9578
