On the pension fund side, costs and the programs themselves are key technology concerns.
Steve Kornrumpf, director of the New Jersey Division of Investment in Trenton, wants to operate in a world of online trading and automated global trade processing.
He is looking for something better than the current INDATA IMS trade order management system for equities. He wants real-time prices and real-time online data. But he wants it in a proven format.
"We are kind of a show-me shop. . . . We are not going to be the first ones out there using something. We will use what we know works," he said of his search for the right trading technology.
The closest he can get to a world of online trades so far is Instinet, he said. The $76 billion pension fund's investment staff uses the electronic trading system to conduct about 20% of all over-the-counter domestic equity trades, but is constantly in touch with firms that have similar systems.
New Jersey manages $40 billion in domestic equity and $10 billion in international equity internally.
On the bond side, TradeWeb LLC, the New York-based online bond trading firm, likely will be used on a trial basis in another six months after contracts are signed, said Mr. Kornrumpf.
He realizes the wait might be longer for automation of global trade processing, especially because the standards have yet to evolve.
The decision on buying any system often comes down to doing a cost benefit analysis, which likely also will include a look at trading volume in the asset class.
Like their counterparts in New Jersey, staff at the Florida State Board of Administration are also on the search for trading technology.
The $93 billion fund is looking for a "best of breed" trade order management system for equities, said Greg Mathes, applications and operations manager for the Tallahassee-based pension fund. He doesn't expect a formal search for a new system to begin until after the new year.
The fund uses Global Portfolio Valuations System offered by Boston-based Computer Aided Decisions Inc. It offers a trade order management system as part of its portfolio management software, which allows investment staff to import trade information from external managers and from electronic trading systems. But Mr. Mathes continues to search for a better trade order system for equity trading.
While he is happy with the product, he acknowledges that the fund has been using the same software since 1993 and there are newer - possibly better - programs to be found.