“Orchestrade’s name comes from the orchestra: the planned coordination of many elements, moving together, each distinct in their own part but combined to create a seamless whole,” explains Co-Founder, Hakim Erhili. After 30 years in portfolio and risk management systems in banks (Société Générale, Morgan Stanley) and vendors (Calypso Technology and Infinity Financial Technology), Erhili determined that the challenging market and regulatory climate created by the Global Financial Crisis demanded a disruptive new approach. The crisis highlighted the interconnectedness of markets and the existentially important need to see all P&L, risk, and trade life cycles in one place. Orchestrade was conceived to help banks, asset managers and hedge fund managers meet these imperatives. Orchestrade provides real time position, P&L and risk data to inform front office decision making; what sets their solution apart are the additional insights from the cross-asset and cross-instrument data model that power the platform.
“After 2008, the landscape had changed dramatically, and the so-called best of breed approach of combining multiple systems was increasingly seen as too complex and expensive, especially for hedge funds with smaller budgets than banks and brokers. We decided to create a single cross-asset system for buy side and sell side on one platform,” says Erhili. In 2009, Orchestrade was born with a mission to centralize coordination and automation of all trade processing: allowing for seamless downstream processing for all financial instruments ranging from basic treasury products to more exotic and complex over-the-counter derivatives and structured products and accommodating innovation in new markets and derivatives. Product agnostic trade processing workflows let Orchestrade swiftly add new asset classes, such as carbon or crypto. “We have proven we can add any complex product to the platform more quickly and cost-effectively than most incumbent vendors,” says David Coe, Global Head of Sales.
Orchestrade’s name comes from the orchestra: the planned coordination of many elements, moving together, each distinct in their own part but combined to create a seamless whole.
Hakim Erhili, Co-Founder
Orchestrade started with a blank canvas, was cross-asset from the outset and is thus dubbed “natively cross-asset”. “This is more efficient and less code intensive than stitching together multiple systems sometimes designed decades ago and optimized for single asset classes. Cross-asset marks an advance on multi-asset because multi-asset combines multiple single asset systems with different data models. With cross-asset, it all sits on one data model, or data cube, at the back end,” explains Jonathan Gane, Global Head of Capital Markets, who has previously worked in funds of hedge funds, prime brokerage and FinTech investing.
This thinking also resonates well with management consultant analysis of the FinTech market. Boston Consulting Group categorized FinTech systems into “first generation” being single asset class and mainly front office, second generation moving towards “front to back” but still stuck in a single asset class philosophy and data model, while “third generation” platforms such as Orchestrade, address the problems of previous single asset class models.
Orchestrade’s first client from 2009 is still a user, and the customer base has been sticky and loyal. The client roster of buy side, sell side and energy customers continues to grow year over year. Hedge fund clients include some giants of the industry, such as three of the largest 15 funds in the US, one of the biggest in Europe and two of the top ten in Asia. Of more than 20 buy side clients, seven run over $15 billion. Taken together, the top five clients manage over $120 billion.
New York-based macro manager Element Capital underscores the versatility and manifold benefits of working with Orchestrade: “Element Capital was an early adopter of the Orchestrade platform, and we have been a satisfied customer for over 10 years. We appreciate the cross-asset nature of the platform, the comprehensive listed and OTC product coverage, modern API architecture, intuitive UI and live risk performance that Orchestrade provides. The application’s flexibility and customizability has made it a core part of our technology ecosystem. As a service provider, Orchestrade is very responsive and will make senior experts available on short notice. They are keen to enhance and adapt the software to meet the needs of our business and will offer creative interim solutions as required. Orchestrade is a valued partner and helps our organization remain agile and responsive to markets,” says Matt Darnall, Head of Modelling and Technology.
Clients have historically been won mainly through word of mouth, with network effects and referrals from senior risk, operations and technology executives being the primary source of leads, often when key individuals moved firms.
Sell side clients include banks and private banks, who often need to go through a formal RFP and RFI process; Orchestrade recently acquired a wealth manager client in Latin America via this process.
Orchestrade is most useful for wider trading universes and more complex strategies, including those active in OTC and listed derivatives, multiple markets, multiple currencies and emerging markets. In equities Orchestrade is widely used for equity swaps and CFDs by 75% of hedge fund clients. A structured products framework is available out-of-the-box and custom structures are onboarded into the core platform in response to client demand.
For a plain vanilla equity long/short or equity market neutral strategy, or those perhaps only trading exchange traded derivatives, there are cheaper and simpler systems available. But when CTAs start to diversify from exchange traded futures into areas such as spot and forward FX, and crypto, the benefits start to add up. Orchestrade covers a growing suite of volatility products and the cryptocurrency complex.
The growth of multi-strategy platforms, and the fact that some macro funds have transitioned into multi-strategy platforms, is further enlarging the potential client base. “Clients are not only optimizing what they have today. They also want to future proof for their growing range of strategies. Multi-strat funds are the new funds of funds,” says Gane.
In Asia, where Orchestrade have recently hired senior leadership and are opening an office in Singapore, they are currently onboarding a multi-strat manager active in macro, volatility trading and other trading strategies including complex options. In keeping with the company’s philosophy on market standard integrations, the prime broker interface has been further extended for Asian markets.
The system has the capacity to handle large volumes of trades and datapoints. “Some clients trading equities, listed derivatives or equity swaps can do 100,000 or more trades per day,” says Jonathan Gane, Head of Capital Markets.
Most hedge fund clients run at least $1.5 to $2 billion. Around 200 firms globally are likely to be large and complex enough to benefit from the full functionality of Orchestrade. The main reason for client turnover has been a very select group of smaller funds not growing as fast as hoped. Orchestrade generally wants to see assets of at least a billion but is prepared to take a constructive view on the growth prospects of some startups. “We undertake a lot of due diligence to help maximise the probability of working with the right managers that are newer launches,” says Gane.
One good example of a new fund adopting Orchestrade on day one is London-based emerging markets credit manager, Mesarete Capital, which demonstrates not only Orchestrade’s swift onboarding and customer service but also the broader network benefits of being part of the evolving Orchestrade ecosystem: “Mesarete Capital selected Orchestrade for our fund launch in 2021 with a key element being the integrated VAR engine enabling us to implement a single system for managing our fund clients. The partnership started strong with an impressively quick implementation. Our approach has been to rely exclusively on out-of-the-box functionality in Orchestrade and we have yet to encounter a blocker. Whenever possible, Orchestrade will implement enhancements into the core solution to minimize customization and share the benefits with all customers – which they demonstrated ably at the start by quickly delivering a risk enhancement we had requested for the launch of our fund. Orchestrade’s cross-asset capabilities, extensive out-of-the-box interfaces and ease-of-use enables our team to focus on our business instead of tangling with technology issues. The team is great to work with, and we are very happy to have Orchestrade as a strategic partner underpinning the infrastructure for our fund,” says Andy French, Founding Partner and COO of Mesarete.
ETRM/CTRM (Energy/Commodity Trading & Risk Management) clients include investment managers, global energy traders, utilities and power generators. The application supports front to back physical and financial trading for integrated energy and environmental trading. Energy is the newest functionality: the final build out with the largest physical energy client, Engie Global Markets, was completed in October 2022. “Engie have over 1000 users across Europe and Asia on the platform and use our full front to back ETRM system for all their operations across, trading and production and supply hedging and risk management,” says Dale Emmerson Head of ETRM Strategy.
Recent additions to energy coverage have included functionality to support energy transition, including renewable forecast management, PPAs, as well as emissions and green certificates. The initial impetus was the energy clients, but Orchestrade also added the markets in anticipation of demand from banks and hedge funds. This is the usual pattern: innovations added for one client are extended to all. Thus, hedge fund clients can also tap into wider financial commodity functionality for their own trading and risk management, as part of commodity coverage that also includes listed metals and agriculture.
Orchestrade addresses the challenges of multi-asset class trading through a real time Trade Lifecycle Book of Records (TLC-BOR). “This factorizes an asset class into lists of events, workflows and data. Events could include exercises, assignments, terminations and novations. Clients then define the relevant actions and triggers for each asset class, which leads to real time workflows, exception rules, data analysis, compliance and trade lifecycle processing. This integrated approach within one system means that the implications of a corporate action or credit action can be instantly applied across asset classes,” explains Gane.
Near real time data is adequate for most users because the client base generally does not need millisecond data for high frequency, algorithmic, or co-located trading. They need near real time data primarily for post-trade activities of pricing, risk and valuations, including margin and collateral – and the same system handles intraday and end of day calculations. The degree of latency depends on where clients get their data from, which is usually third-party sources such as Bloomberg, Refinitiv or internal sources.
The system has the capacity to handle large volumes of trades and datapoints. “Some clients trading equities, listed derivatives or equity swaps can do 100,000 or more trades per day,” says Gane. “In the energy and power space, 15-minute blocks can add up and one physical energy client sometimes executes 30,000 trades an hour,” says Emmerson.
Meanwhile, energy valuations can entail similar numbers of inputs. “Valuation of complex renewable energy contracts such as Power Purchase Agreements (PPAs) require a forecast of power production based on the weather, for example wind for a windfarm PPA. The forecasts can be down to ½ hourly granularity 2 years forward and they can have 100,000,” says Emmerson. The system is flexible and transparent in providing pricing data and models where relevant. Mark to model derivatives (for energy or financials) can be valued using Orchestrade models, clients’ internal ones, or third-party vendor models.
Orchestrade can replace multiple systems and become the backbone of a hedge fund’s technology estate. Equally it can be retained for a single use case.
Some clients opt for a fully integrated front to back solution for portfolio management, risk, post-trade and order and execution management (in conjunction with Rebar Systems or other partners), while others focus on a key functional area such as front, mid or back-office components, which can also dovetail with their proprietary and/or vendor packages using API integration. “Our APIs make it easy to enrich or extend the platform. Clients and Orchestrade developers have access to the same APIs for customisation. Developers at Orchestrade and clients work together to embed and integrate the system leading to complete interoperability,” says Gane.
At Orchestrade, salespeople, product managers, segment leads in capital markets and energy, and management, determine together whether to build or integrate with third-party platforms. “For instance, from the start we made a conscious decision to focus mainly on portfolio management and risk management systems, post trade, and not compete in OMS and EMS,” says Erhili.
In other cases, there is a blend of internal and external solutions. Orchestrade provides some regulatory reporting e.g. for MIFID/MIFIR, EMIR, Dodd Frank, and also feeds data into third party pure play solutions.
Orchestrade has a large suite of “best of breed” technology partners including Watson Wheatley, Everix, BidFX, EZOPS, GLMX, CRZ Pricing, Zeliade Systems, Numerix and Rebar Systems.
Orchestrade and Rebar have a long-standing relationship since Rebar is one of Orchestrade’s “best of breed” partners on the OMS and EMS side. A deeper alliance with Rebar now offers one possible configuration for a fully integrated, front to back, cross-asset trading platform solution.
Rebar Systems was founded in 2010, in partnership with Tudor Investments, which then became its first client when Rebar was lifted out. “Rebar was created to improve execution management systems, which lacked cross-asset flexibility, customisation and bespoke logic. The vision was to bridge the gap between vendor and internal proprietary systems and offer the best of both worlds,” says Adam Striffler, Rebar COO and CFO.
We wanted to be patient and in control of our destiny and timeline.
Hakim Erhili, Co-Founder
Rebar’s flagship order management and execution platform (ROME™) product targets the same client base as Orchestrade: large and complex hedge funds, including some of the largest macro managers. “There needs to be a good philosophical fit to deliver accretive value,” says Gane. The cultural fit is strong since both firms were founded around the same time with the same core markets. There are synergies in terms of technology, product coverage and marketing. “Like Orchestrade, Rebar has the flexibility to model and risk manage bespoke, structured OTC trades, where it is harder to understand risk,” says Striffler.
Rebar dovetails well with Orchestrade: “Rebar handles order generation, pre-trade rules such as business logic and compliance, and then sends the trade back to Orchestrade for post-trade processing,” says Striffler.
In common with Orchestrade, Rebar caters for a relatively small number of clients, twelve as of August 2023. There is already some client overlap and the two have now devised a joint strategy, which brings the advantage of prepackaged integration (though there are still two sets of contracts, deployment builds, and support teams). “The integration work has already gone through the “heavy lifting” of software layers, which could take months for internal or other vendor PMS,” according to Striffler.
Orchestrade is adept at integration with hundreds of partner firms: “We have been exposed to all major prime brokers and execution interfaces on the market,” says Gane. There are at least 140 standard market interfaces that plug into data providers including prime brokers, fund administrators, trade affirmation, trade execution venues and order management systems.
A demonstration of the system showcases its breadth of scope and versatility. Drop down menus have ready-made, easily navigable, shortcuts that let users slice and dice the data by asset class, instrument type, trade type and data type; by today’s trades or tomorrow’s expiries; by puts, calls, settlements and maturities, as well as by flows, fees and commissions. Option event patterns can be split into categories such as exercise, assignment and termination.
The P&L screen can calculate, categorise, and aggregate pricing, valuation and P&L in a base currency or a different currency, and benchmark performance. This lets front office traders, mid office and back office alike view P&L and risk in one central hub, from any instrument or perspective.
The data cube can be sliced from any angle, such as product, strategy, pod, team, portfolio manager, book, instrument, trade type, or individual position. “This is a pivot grid on steroids that lets users reorganize and reconfigure data any way they like, on the fly,” says Gane. “They can also drag and drop and drill down into funds, accounts, strategies and books, and create their own hierarchies, groups, tags and flags, to re-order or re-sort the data.” Splits can also be done by users, department, entity and division, which can be helpful for access rights and permissions.
Trades can be captured manually or fed automatically from an OEMS, for all instruments and asset classes. Everything is booked in one place and equity and FX, interest rate and swap risk systems are talking to each other. Quote data and curve data is all integrated so it can feed into adjustments, customisation and different interpolation techniques for various curves. They can drill down to curve pricing for an individual position.
Beyond this there is huge potential for additional configuration and customization on all screens.
None of this requires any fresh coding. A right click can easily export files into Excel. A native Excel-add-in can be used for all of Orchestrade, or for specific functions. On top of the desktop GUI, the browser-based UI is being ported to handheld devices.
“Our dream is the no touch solution where customers can switch on the computer and use it on day one. They can reconfigure data, colour patterns, points on the curve,” says Erhili.
This granular functionality is very useful for multi-strategy hedge funds or managed account platforms, both of which have dozens or hundreds of different strategies.
Since 2011 some Orchestrade clients have used Cloud Service providers (“CSPs”) Options-IT, Edge and others. Since 2016, the package has been run on other data centres, including public and private clouds. Infrastructure partners include AWS, Cloud Temple, Options-IT and Abacus Group. It can also be deployed on Azure, Google Cloud and other cloud platforms.
Orchestrade can be installed on-premise, which is required by some bank client segments, and Rebar has been mainly on-premise. “Historically Rebar clients have been on-premise although it can be deployed through the AWS platform. If trading a high level of transactions, some public CSPs are not as performant as an LD4 or NY4 data centre. And some clients need co-location with data centre providers where exchanges are located,” explains Striffler.
The Orchestrade system has moved from being cloud friendly to cloud native, which involves shorter deployment times and new code. Version 9 will become the cloud native version and in future very few deployments should be on-premise, since clients on-premise are migrating to public cloud. Some 90% of clients are already using the cloud-based system and the remaining 10% are looking to deploy it soon. This should allow for faster and cheaper deployment for both Orchestrade and clients. “At the same time, it is not a multi-tenant solution, each deployment is distinct to the client’s own cloud,” clarifies Coe.
Cloud offers potential to reduce costs by moving from a full ownership to a timeshare model: “Cloud creates another level for Total Cost of Ownership (TCO) optimization, which was not available in the on-prem model. In the old days, you bought your computer, and you were stuck paying for all the CPUs and memory 24×7. With cloud you can scale the infrastructure based on the task required and for the duration necessary,” says Rishi Suchak, Head of Client Management.
A single code base reduces the volume of calculations. Orchestrade claim that their code base is just 10-20% of some competitors’, even though functionality and product coverage may be greater.
A lower code base is one reason for faster client and product onboarding and swifter add-ons, customizing and upgrading. “Our experience suggests that implementations can be 50% faster than legacy vendor systems,” says Suchak. The business model involves an upfront implementation cost and a subscription model.
Orchestrade’s growth has been all organic. It has received overtures from private equity and other potential acquirers over the years, and would never say never, but has thus far not needed additional capital. The business was profitable and self-funded from an early stage. “We wanted to be patient and in control of our destiny and timeline,” says Erhili. The firm is however open to other marketing joint ventures in addition to the alliance with Rebar.
Orchestrade is seen as “the best kept secret” in the industry because until recently it was rather like some quantitative hedge funds in that most resources were devoted to research rather than marketing. “We always invested a lot in the product but did not invest enough into sales and marketing. There were almost no sales and marketing resources. Paul [Bardavid, Orchestrade’s co-founder] and I are both engineers and we hired people to build the product. Now we want to make sure we can maximise the number of clients,” says Erhili, who expects to bolster his market share as the consolidation dust settles. The number of vendors in the space has already shrunk from around 30 to 10 due to mergers. “We expect to be one of 2 or 3 survivors. Institutions must be on one of these platforms to be future proof, we believe the right one is Orchestrade,” says Erhili.