Axes, the cross-border trading platform set up by New York-based prime broker Auerbach Grayson, is to introduce value-added commentary to its service in the New Year, using research from Indian outsourcer KARVY Global Services, officials tell Inside Market Data.
KARVY will be providing commentary on top of the research provided by Axes' partners—brokers who provide execution services in specific markets—and will "add more strength in undervalued regions, especially in emerging markets," where the platform has clients but where high-quality research and commentary is not easily accessible, according to Axes president Peter Gaffney.
"KARVY is enhancing and filling in the gaps in our existing research. Brokers are the cornerstone of our offering... but we also want to create something for the sell side and hedge funds... on a daily basis," Gaffney says. "Our main goal is to educate US investors on what's happening outside their market today."
Axes now operates in 101 countries, 45 percent of which the broker classifies as emerging "frontier markets."
"The biggest value-add will probably be in emerging and frontier markets—i.e. information that doesn't come across the industry well yet because companies don't have those international partnerships," Gaffney says. "When firms start trading internationally, they will typically start where there is a cross-listing or a US ADR. But hedge funds are looking for alpha... and though there is information out there, it's not free-flowing."
"The added value is trader-specific research notes [with a focus on] lesser-developed countries which may not be as highly developed as Tokyo or London but where there is great potential to make money," says Krishnan Sakotai, vice president at KARVY and head of the company's Knowledge Process Outsourcing business unit in Hyderabad, which provides securities research and investment banking support services.
Indian Partnership
Sakotai says that KARVY, part of one of India's top stockbroking firms, originally approached Axes' parent Auerbach Grayson about acting as a local execution partner for the Indian market. These discussions are still under way, but during the past six to eight months the two set up a pilot test to analyze the feasibility of collecting and augmenting research on the markets in which Axes wanted to provide local execution.
Then KARVY developed a template of what an Axes research report template should look like and what information it should include. Though he declines to give specific details, Sakotai says the reports will combine technical and fundamental information on economies and possibly on individual companies for traders to identify trends, breakouts and other indicators.
KARVY uses automated data-capture processes to extract source data from secondary research sources and the Internet, as well as from subscription data services such as Bloomberg, and other region-specific data sources. Then the company's team of analysts uses that data as the basis for value-added commentary.
The resulting reports are uploaded to the Axes platform via File Transfer Protocol, from where they can be distributed to users as PDF or Microsoft Word documents either via secure VPN access or email.
The agreement was signed in November, and Sakotai says the research reports should be ready to go live within a matter of weeks. Both parties decline to comment on the value of the deal, but Gaffney describes it as "an open deal—it will run for the first year, then expand to multiple years."
Max Bowie |
