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A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider

Full Article: Business Insider

AllianceBernstein has sold the intellectual property and technology behind ALFA to Algomi, a fixed income data platform. AllianceBernstein is also taking an undisclosed minority stake in Algomi and a seat on the board.

Comments
  • Mustang
    MustangMay 25, 2017"The only way to commercialize this quicker is if the technology stack is in alignment with Algomi's technology stack. If not, then this could be very tricky. This also assumes that the software is ready to be commercialized. How it was built for AB may not be in line with commercial purposes. I suspect it's not ready, but time will tell. Despite the buzz, I wonder what timelines T.Rowe, BBH and others were given for an implementation. I got money on '18. A point of cl…"
  • ChipperMay 25, 2017"I don't disagree with everything you're saying, but much of it I do. Please know that my intention is not to attack YOU, but rather to point out where I think your assessment may be flawed - at least in my humble opinion. First, I do not believe any firm will be successful using ALFA (or an ALFA-like system) if it is forced onto the desk of traders. That will never work. Traders need to see the value in using it. I think AB has solved this issue as their traders see a…"
  • Mustang
    MustangMay 25, 2017"To be clear, I don't either like or dislike Algomi. I have been both critical and supportive in the past. I solely comment on market structure with the intent of creating dialogue. I wish them well, but I don't think their good execution has much of an effect on ALFA's success. Somehow, you are conflating the realities of fixed income culture and whether you think I am suggesting Algomi should be on the hook to change that culture. I don't think that at all. I think t…"
  • Goose
    GooseMay 24, 2017"ALFA is definitely a product that can help the buyside navigate. I, and it seems others are puzzled by the choice of Algomi as a dance partner, given what is known about Algomi's success so far. Best of luck to them both. Perhaps a good product in the hand of master marketers will now equal success. The market will decide.…"

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14 Comments on "A $500 Billion Dollar Investor Developed ‘Cutting Edge’ Technology, and Now it is Sharing It – Business Insider"

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Mustang
Member
“I want to like this move, I really do, but I can’t get there.”-Merlin Same here. Some comments and random musings: 1. Algomi’s strength is and has not been in building good products. Given this, buying an existing product seems to fill one of their key issues as a company. 2. This introduces a new complexity– integrating a new product into their existing honeycomb product with potentially differing technologies and overlapping functionality. Remember, #1. 3. Given 1 & 2, this is far from a slam dunk. Algomi scaled before they got product right, they now they have to integrate ALFA… Read more »
Iceman
Member
Congratulations to Alliance Bernstein for creating and then monetizing their platform. In a world were OMS are clunky and incumbent providers are doing little if anything to further their clients needs and focusing on their own revenue opportunities (most of which are not aligned with their clients) a new player entering the market created by end users should be welcomed. That being said the partnership throws up an interesting conundrum. As quoted in the piece ‘ALFA takes in data from the slew of trading venues that have popped up, such as TruMid and Liquidnet, as well as legacy players like… Read more »
Chipper
Member
I have seen the comments regarding the spinoff of ALFA to Algomi. Before I throw my two cents in, I want to make it clear that I have no horse in this race. My thoughts come strictly from my perspective as an innovator in the financial markets for over 25 years. It is rare when an opportunity arises to commercialize a technology designed by an actual user with the footprint of a firm like Alliance Bernstein. Yes, the marketing aspects of this were most likely a significant part of Algomi’s decision process, but we cannot underestimate the other factors that… Read more »
Mustang
Member
Technology that solves workflow issues, on its own, does not solve workflow issues. This is well documented in many other B2B software segments. What do I mean? Look at the CRM segment, which is arguably the oldest workflow software segment. It’s Achilles Heel is well documented to be that users on their own don’t use it. Sorry, but software is not a panacea to fix the ills of the market. Why does AB have such success? It’s not the buttons that they built. It’s the culture within AB. They’ve hired traders that were younger, more prone to technology adoption, come… Read more »
Chipper
Member
I’m sorry, but your response is gibberish and makes no sense. The value in the ALFA/Algomi deal has nothing to do with the ability of Algomi to export the culture of Alliance Bernstein. That is like saying Microsoft Word is useless unless you’re an accomplished author. They are creating a tool that, if used properly, can be very disruptive to the industry. There may be other ALFA-like technologies that have been created at other large asset managers, but making ALFA available to smaller asset managers that may not have the resources to build it on their own is value-added in… Read more »
Mustang
Member
As you stated: “They are creating a tool that, if used properly, can be very disruptive to the industry.” First, Algomi didn’t create this tool–they bought this one– this is a massive pivot for them. Second, the same can be said for any ATS– if used properly, it can be disruptive. The real crux of the issue I was highlighting is precisely the comment that you made– “if used properly”. This is workflow software. Workflow software needs people at a minimum to use it and not necessarily be an expert. Therefore, your MS Word example is parabolic and makes no… Read more »
Chipper
Member
One aspect of your commentary that resonates with me, if I understand it correctly, is that an evaluation of the “people” and “process” needs to be done in order to maximize ALFA’s effectiveness. I totally agree with that. However, Algomi’s role does not include changing the culture of an organization. Algomi may need to articulate the importance of “people” and “process” in their conversations with prospective clients and provide a significant level of training to firms that adopt the technology. I totally buy that. However, this speaks to the importance of properly developing and executing the strategy. They should not… Read more »
Goose
Member

ALFA is definitely a product that can help the buyside navigate. I, and it seems others are puzzled by the choice of Algomi as a dance partner, given what is known about Algomi’s success so far. Best of luck to them both. Perhaps a good product in the hand of master marketers will now equal success. The market will decide.

Mustang
Member
To be clear, I don’t either like or dislike Algomi. I have been both critical and supportive in the past. I solely comment on market structure with the intent of creating dialogue. I wish them well, but I don’t think their good execution has much of an effect on ALFA’s success. Somehow, you are conflating the realities of fixed income culture and whether you think I am suggesting Algomi should be on the hook to change that culture. I don’t think that at all. I think this is far from a slam dunk as the solution is likely successful due… Read more »
Chipper
Member
I don’t disagree with everything you’re saying, but much of it I do. Please know that my intention is not to attack YOU, but rather to point out where I think your assessment may be flawed – at least in my humble opinion. First, I do not believe any firm will be successful using ALFA (or an ALFA-like system) if it is forced onto the desk of traders. That will never work. Traders need to see the value in using it. I think AB has solved this issue as their traders see a lot of value in it. I do… Read more »
Mustang
Member
The only way to commercialize this quicker is if the technology stack is in alignment with Algomi’s technology stack. If not, then this could be very tricky. This also assumes that the software is ready to be commercialized. How it was built for AB may not be in line with commercial purposes. I suspect it’s not ready, but time will tell. Despite the buzz, I wonder what timelines T.Rowe, BBH and others were given for an implementation. I got money on ’18. A point of clarification: I’m not so sure AB traders saw value in it. As per previous articles,… Read more »
Cougar
Member

Fixed income electronic trading is difficult (or fragile) as it is which is mostly visible in the small ticket sizes compared to voice blocks. As a dealer the absolute worst thing a client can do is hit or lift you while doing the same simultaneously away with another dealer and not telling you. ALFA sounds like a great idea for a single firm to use and use alone.
One hopes AB’s monetization is symptomatic of the rise of the buyside’s increasing engagement in market structure CapEx.

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