The TIM is the leading alpha capture system used by institutional brokers to send long/short equity trade ideas to their hedge and quant fund and more traditional money manager clients, and for portfolio managers to easily demonstrate the value the sell-side provides by cutting through the flood of information and noise sent via emails and telephone calls.
"Wall Street and the City are facing a new set of challenges â huge volatility, less leverage to boost results, significant reductions in stocks to short, and cutbacks on sell and buy side trading desks,â says Colin Berthoud, Sales Director, youDevise. âTo capture more alpha, brokers and their clients need to react faster and gain productivity. In response, we have developed new ways to speed the creation and distribution of equity trade ideas from the sell to the buy side, and the buy sideâs ability to use ideas.â
â¢ The first feature enables the TIM to identify automatically the parameters required by each client for an idea. For example, an equity sales person might want to send an idea on the same stock to three clients, each of which has different trading strategies and investment guidelines. The TIM now enters the different parameters such as currency, pricing method, and investment amount automatically as required by the client.
â¢ The TIM also has been enhanced to permit an equity sales person, who has already sent an idea to different clients, to add to or reduce their investment, or close all of those ideas at the same or different times, depending on client strategies and rules. For example, some clients require a minimum holding period, and others require minimum investment amounts. TIM guides the author through each of these requirements, defaulting values and other parameters where appropriate.
â¢ In addition, the TIM now enables trade ideas to be sent directly into buy side black box trading systems used by quantitative or algorithmic money managers. Previously, ideas were delivered by less reliable or slower mechanisms such as email.
Launched in late 2005 in London, the TIM today brings together more than 4,000 equity sales people at 300+ brokerage firms and more than 2,000 traders and portfolio managers at 100+ money managers. This has led to the adoption of trade ideas as a new value added service on Wall Street and in the City, with investors typically allocating 30% to 100% of commissions based on idea performance.
Use has skyrocketed. There are 426 firms using the TIM, up 64% year over year, including some of the largest investment bank-brokerage firms in the world as well as major hedge funds and asset managers in North America, Europe and Asia Pacific. Through November, brokers have sent 3.6 times as many new ideas as last year. As usage has grown, so has the TIMâs historical database of broker performance, which is used to estimate future returns. Through November, the TIMâs âIdeabaseâ is up 355%, to more than 410,000 closed and open ideas, significantly increasing the systemâs predictive capabilities.
Collectively, brokers using the TIM have accurately predicted this yearâs market. Their percentage of short ideas peaked at 45% in August, in advance of September and Octoberâs declines, then jumped to a new high of 47%, in advance of Novemberâs rout.