Jim Kwiatkowski, executive vice president of sales and marketing at FutureTrade, Lake Forest, Calif., added that in some cases, algorithms might look alike but perform differently, adding another layer of difficulty.
"They're being represented as low touch, so this complexity gets pushed onto the trader and he has the real opportunity to fail," he said.
FutureTrade, which has an agency-only broker-dealer unit, has developed a trading system that integrates various functions including multibroker electronic trading tools as well as independent transaction cost analysis and commission management technology.
Mr. Grossman said part of the confusion for asset management traders who are finding their desktop computers already cluttered with 20 or more icons for trading and other related functions could be that brokers are also offering their own transaction cost analysis programs.
"I don't see any reason for the buy side to be using more than one TCA," Mr. Grossman said. "You don't need to be using TCA from Goldman, TCA from Merrill and TCA from JPMorgan."
Jim Morrow, chief operating officer at Capital Institutional, known as CAPIS, explained that most traders have core operating or trading systems, to which all the other bells and whistles need to connect.
"The trader needs that central system to be the hub that connects all these other electronic systems," he said. "It's the connectivity into the central system that has been creating the stress within the industry."
Those central systems are the order management systems provided by companies such as Charles River Systems Inc., Burlington, Mass.; Eze Castle Software, Boston; and Macgregor, Boston, which is owned by ITG Inc., New York. These systems typically include portfolio management, compliance, trading and post-trade applications as well as access to broker-dealer algorithms.
Mr. Grossman said order management system developers are beginning to integrate the various trading functions into one complete system, but they're not alone.
"You're starting to see a lot of these things merging onto one platform," he said. "Two, three years ago we had the OMS (order management system) guys, we had the execution management guys, and we had the TCA guys. We're starting to see the merger of OMS and execution management systems as well as network and routing capabilities."
He added that this merger of systems was likely one of the reasons ITG acquired Macgregor last year.
At Atlanta Life Investment Advisors, Atlanta, Drake Craig, a principal and portfolio manager, uses an order management system to connect to FutureTrade.
"Being able to integrate access to different end markets has been somewhat challenging," Mr. Craig said. "It was important for us to move in the direction of getting a system that would help manage the administration process, so we brought in an OMS that allows us to hook up to FutureTrade as well as several other brokers electronically."
Vincent Agosta, CEO of Trading LLC, San Francisco, an outsourced trading desk for hedge fund managers, said he uses FutureTrade to integrate electronic orders from six or seven trading venues as well as for transaction cost analysis and to allow his clients to handle commission management.
"You can get this piece of trading business done at this firm, another piece at another firm, commissions at another one and TCA at another, but FutureTrade is really the only place we've found thus far that provides all the different pieces," he said.