As has been the case with many industries, the Financial Services Sector of the investment community has seen technological advances that have spurred major changes andgeneral improvements in the last 15 years.
As a major provider of investment softwaresolutions since 1983, Roberts-Slade, Inc. has had a bird's eyeview of the industry and has witnessed major changes. In the late 70's, access to real.time quotation services were limited to large brokerage houses, banks and other large institutions. Institutional money managers were content if they had access to a quote terminal that provided real-time quotes and news on stocks, bonds, and futures. Any charting or elementary technical analysis was most likely done by hand, if a trader had time, at the end of a busy trading day. There were very few competing products and the cost of financial market information was high. Individual Investors wanting to trade from home or a small office had several barriers to entry including high costs and logistics problems in accessing quotes.
By the early 80's the emergence of the personal computer was quickly changing every aspect of the Financial Services Industry. Computers were small relative to today's Pentium machines. Robert-Slade's first computer was a basic PC with 64k RAM and two floppy disks (priced at nearly $4000.00); later we added a 10 meg hard drive and we were satisfied that we had one of the more high end computers in the industry. By the mid 80's hardware and software products were more affordable and traders were finding out that they could make a lot of money in the markets if they could have access to computerized trading systems. Futures traders seemed to be inclined to trade the markets short term based on technical information such as charts, technical studies, trend lines, etc. For this reason many of the first good investment software products were developed for futures traders. By the mid 80's real time products like the CQG, FutureSource, MarketView were popular. Computrac was also widely used, despite only being available as an end-of-day product, primarily because it had integrated and computerized most of the popular technical studies.
These products were good products but there seemed to be room for improved graphics/charting and increased flexibility. It was during this time period that Roberts-Slade introduced a product called MasterChartist. Though out of the mainstream, RSI had chosen the unique Macintosh platform because we felt that in a graphics oriented industry which seemed to be obsessed with charting and technical analysis that the capabilities of the Macintosh would provide something unique and marketable.
The technical analysis craze was in full swing. Traders talked constantly about Gann Angles, Trend Lines, Market Profile, multiple windows and other technical indicators which had recently become more readily available through advancing computer technology. The MasterChartist product proved at an early stage, to set several industry standards. I recall the crowd that gathered around at the 1987 FIA show in Chicago as we demonstrated for the first time in the industry a mouse driven Interface, multiple windows, movable/resizable windows, and trend lines created quickly with the point and click interface.
Though the Macintosh was ahead of its time graphically the investment community embraced DOS and UNIX and therefore most investment software products were developed in these environments. In an effort to compete with CQG, FutureSource, and others, Roberts-Slade came out with a mouse driven DOS version of MasterChartist. While advances were being made in the investment software industry the business of delivering real.time quotes was also getting more competitive. With increased flexibility in delivery mechanisms such as Equatorial Dishes and FM Side Band companies like Bonneville Market Information, DBC Signal, and S&P Comstock (all of which were using different names and under different ownership then) were making their presence known. These new quote services were not only stealing market share from big quote vendors but were growing the industry with reasonable prices and creative, convenient ways to deliver quotes. In order for these quote service companies to compete with complete solutions such as CQG and FuturesSource who were providing quotes and charting they needed to create alliances with third party software companies. This demand set into motion a multi-million dollar segment of the Financial Services Industry.
Roberts-Slade was one of the first third party applications companies to provide charting and technical analysis for quote services interfacing with Bonneville, DBC Signal, S&P Comstock , and Knight Ridder. Later Roberts-Slade would developed an exclusive charting package for the popular Reuters SDS2 service.
By 1990 the investment software industry had become a more competitive environment. There were several new quality software applications such as Roberts.Slade's FirstAlert product, Aspen Graphics from Aspen Research, Omega's Trade Station, Market Vision, Insight and many others. All these products were 3rd party investment software applications working with the popular quote vendors. While the increased number of players in the investment software community segmented market share and decreased margins this environment most generally worked to the benefit of investors and traders. There were more software products available at affordable prices (less than $1500). Initially, however, price competition seemed to lessen the quality of investment software tools available. By 1993 there were several good investment software products available some providing a simple solution while other products were providing a more complete solution at a higher price. The futures industry seemed to be saturated with charting and technical analysis packages.
The days when drawing a trend line, resizing a window or displaying an overlay on multiple technical studies would stop a crowd was over. A product could no longer claim superiority based solely on the merits of charting and technical analysis; there were several products providing these basic features. At this point the investment software industry seemed to divide into three general Sectors:
Sector 1 End-of-Day Software generally used by non industry professionals who have some interest in the markets.
Sector 2 Less Expensive real-time Products generally used by traders who are trading from home or possibly needed a charting package to go along with the quote service they were using at work.
Sector 3 Sophisticated investment software products that are typically used by institutional investors and more advanced traders who either needed specialized features or who needed access to a broad range of features.
In addition to Futures Traders, Equities Traders were now also requiring more sophisticated tools including technical features like Money Flow, Fundamentals, and Stock Filtering. There were few if any products that could provide a "Complete Solution for the Complete Trader" . No single product could provide the ability to retrieve quotes and Historical Data on Thousand's of Stocks, Advanced Charting & Technical Analysis, Time & Sales, News, Historical and Current Fundamental Data, Real-Time Stock Filtering and Screening, Back testing & Optimization, Options Analysis, Custom Programmability and many other features that the industry was demanding. Developing this type of product would require a development team with experience and a company that is in tune with the pulse of today's modern investor/trader.
While Roberts-Slade initially carved out a large market share providing charting and technical analysis software for traders who needed a good product at reasonable prices, due to saturation from increased competition, a corporate decision was made to change directions. With FirstAlert (RSI's most recent product) RSI decided to go after the Sophisticated Investor/Trader (Sector 3) and charge a price that would allow continued development of unique features while providing a higher level of service. Features specifically designed for stock traders were also emphasized.
In 1996, as a result of fast moving technology and increased competition in the Financial Services Industry, Brokers, Money Managers, Investors and Traders alike have access to better trading tools, more accessibility, and prices that are more reasonable than they were 15 years ago. Perhaps the technological improvements in delivering quotes and the increased level of sophistication with investment software solutions have all helped contribute to the recent record volume activity on Wall Street and the Chicago Financial District.
Having worked in the trenches of the Financial Services Industry for nearly two decades, I am sure that in the future the industry will continue to produce better products with more functionality, more information, more sophistication and more speed. Of course, we expect the industry to continue to be as competitive as ever and Roberts-Slade will to continue to provide modern investment software solutions.
Morgan Roberts is Vice President of Roberts-Slade Inc, of Provo, UT. For more information he can be reached at 1.800.433.4276.
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