CASE STUDY: How LBX Portal and Outsourced Trader Help CAPIS Efficiently Deliver Differentiated Products

CAPIS is an agency broker that offers global execution services and commission management solutions. Founded in 1977, the Dallas-based firm helps institutional investors meet their trading mandates through leading-edge technology and a commitment to client service. To that end, CAPIS is always looking to offer innovative means of enhancing efficiency that can evolve over time…

CAPIS is an agency broker that offers global execution services and commission management solutions. Founded in
1977, the Dallas-based firm helps institutional investors meet their trading mandates through leading-edge
technology and a commitment to client service. To that end, CAPIS is always looking to offer innovative means of
enhancing efficiency that can evolve over time – and that means having the right technology partners in place.

CAPIS ARC – the firm’s electronic solution for post-trade allocation, reconciliation and clearing – is a prime example of
this commitment. ARC was built specifically for investment managers sub-advising the managed account industry.
This utility enables advisors to execute away orders with their broker(s) of choice and automate the allocation and
step-out process with each sponsor platform. This leads to lower costs, simplified operations and easier
demonstration of best execution.

CAPIS’ outsourced trading business is another example of how the firm has evolved to meet client needs. Amid
growing cost pressures, more and larger funds and asset managers are seeking to reduce the size of or completely
shutter their trading desks, necessitating sell-side partners that can face the Street as a true buy-side desk. CAPIS’
outsourced trading desk handles a wide range of asset classes (equities, fixed income, derivatives, ETFs) and offers
solutions across the trade lifecycle, from market intelligence to commission management, enabling clients to focus on
their own differentiated approaches to managing assets and relationships.

Both of these solutions are powered by LiquidityBook, a leading provider of cloud-native trading technology for the
buy and sell sides – in this case, its LBX Outsourced Trader OMS and its LBX Portal distribution model. While CAPIS ARC
and the outsourced trading business were launched years apart, both are examples of how LiquidityBook delivers
transformative results – and today, these two solutions are more intertwined than ever before, resulting in even
greater efficiency for CAPIS’ clients.

“Throughout the entire process, the CAPIS team was engaged, thoughtful and collaborative about the solutions they
needed to create for their clients,” recounted Kevin Samuel, CEO at LiquidityBook. “Both the LiquidityBook and CAPIS
teams share this dedication to our clients, and to delivering innovative, efficient solutions that stand out from the
pack. CAPIS’ outsourced trading and ARC offerings are perfect illustrations of this, and we’re proud to support their

Over a decade ago, as the groundwork for CAPIS ARC was being laid, the firm identified a need to work with a
technology provider capable of building a post-trade solution with unprecedented functionality – and one stood out
from the crowd.
“The flexibility of LiquidityBook’s technology, their ability to move quickly and the expertise of their team were clear
selling points that delivered value from the very start of the relationship,” said Mark Viani, Director, Institutional Sales

at CAPIS, one of the architects of ARC. “We did our due diligence, had an initial conversation with the LiquidityBook team

and within days, we were delivered a framework for our ARC product. It was really incredible.”

The resulting solution empowers CAPIS’ RIA clients to streamline historically inefficient execution and allocation
methods for managed accounts. After advisors select the brokers they want to execute with, the brokers settle to a
CAPIS clearing account. Each sponsor platform receives an automated email notification with detailed delivery
instructions, while clients receive full breakdowns of the execution price, commission or explicit fee, and operational
fee. By mitigating the practice of sponsor rotation, CAPIS ARC helps clients reduce market impact, information
leakage and account return dispersion.

Users interact directly with the CAPIS ARC platform – most sign into a LiquidityBook-powered front end so they can
upload spreadsheets of trades to be automatically processed. This workflow is powered by LBX Portal, an innovative
partnership model that enables sell-side and outsourced trading firms to offer a wide range of out-of-the-box
functionality to their clients. With preconfigured GUIs, seamless upgrade paths and a full range of APIs for custom
integrations, LiquidityBook enables CAPIS to not just offer cutting-edge technology, but to do so efficiently,
economically and at scale.

“LBX Portal is a big reason for the success of our ARC utility,” said Viani. “It simplifies the nuts and bolts of integration,
so we can onboard new clients fast. And as with all LiquidityBook products, the SaaS-based model makes it easy for us
to deploy upgrades on a rolling basis, so we can focus less on delivery and more on tasks that actually add value for
our clients. CAPIS ARC has been enhanced regularly since launch – and that’s a level of innovation and responsiveness
that wouldn’t have been possible without LBX Portal.”

Some of those enhancements have involved tighter integration with CAPIS’ outsourced trading business – which is in itself
another illustrative use case for LiquidityBook.

Outsourced Trading
As CAPIS was laying the groundwork for its outsourced trading business, the firm needed a platform capable of supporting the
unique requirements of this business model. Matt Krebs, Director of Outsourced Trading at CAPIS, described the ideal
solution as a “catcher’s mitt,” able to host client order flow and distribute it to either external brokers for attributed trading or
execute using CAPIS’ legacy trading system. Other key capabilities included handling all allocations and settlements,
and efficiently disseminating relevant data concerning best execution and commission management to clients.

“We needed a solution that would enable us to stand up a true buy-side trading offering, and that meant flexibility was the name of the game,” said Krebs. “We needed to accept
orders like the sell-side firm that we are, but when it came to facing the Street and providing the necessary data and
disclosures, our ideal workflow was much more similar to that of the buy side. From the start, we knew that having the
right technology in place was of paramount importance.”

CAPIS undertook a search process for an OMS capable of supporting these needs and found that most products on
the market were built for the sell side – adapting them for the outsourced trading workflow would require additional
integration or manual processes. LBX Outsourced Trader was the exception. Because its buy- and sell-side solutions
are built using the same code base, LiquidityBook is ideally positioned to offer technology that bridges the gap
between both sides, mirroring the role that outsourced trading plays in the execution landscape.

As a longtime LiquidityBook client (CAPIS ARC had been live for several years at this point), CAPIS had an existing
comfort with the LBX system and selected it to power the new service. Implementation proceeded smoothly, resulting
in CAPIS launching its outsourced trading business in 2018.

One of LBX Outsourced Trader’s key differentiators was its ability to support a wide array of bespoke commission
structures. Outsourced trading firms are often tasked with paying different commission rates on behalf of different
clients, even if the executing broker is the same. Most sell-side systems do not support this complex functionality –
they are built for an omnibus workflow, with a single rate per broker. With LiquidityBook, CAPIS can manage all
outsourced trading order flow via a single point of access while still reporting exact fills to clients, making it easier for
them to assess individual brokers based on execution quality.

“Our ability to create what we call a ‘bottom-up’ commission structure within LBX Outsourced Trader is one of the most
powerful parts of the platform,” said Krebs. “We’re able to not just provide data on overall client commissions, but break them
down into soft commissions, broker commissions and retentions. The fact that we can send trades to any number of
brokers at different rates across the spectrum, all for a single parent order, is huge. It provides a level of flexibility in how we
interact with the Street and in how we monetize our clients’ varying commission budgets. Our hands aren’t tied, so neither
are theirs – and that helps us bring clients through the door.”

Another key feature of LBX Outsourced Trader is its ability to work harmoniously alongside existing OEMS functionality.
While CAPIS leverages a third-party system for its sell-side business lines, the outsourced trading business uses it purely
for execution management – LBX Outsourced Trader can effectively bolt onto the existing infrastructure and take over
all allocations and commission tracking. This is key, said Krebs, because clients often want to see some level of separation
between the outsourced trading business and the larger sell-side organization. “I wanted to select the best system on the market for outsourced trading, but with other
solutions in place, I didn’t want to disrupt the firm’s overall trading technology architecture,” said Krebs. “LiquidityBook
gave us the best of both worlds.”

In the years since their respective launches, both CAPIS ARC and the outsourced trading business have evolved to
even more holistically meet the needs of CAPIS’ clients. Their integration with one another is a key example – today,
RIAs looking to outsource all or part of their trading can access a combined solution for execution and settlement,
whether on an institutional or wrap/custodial basis. Both solutions address the economic and operational pressures
the buy side faces, and the benefits they offer are even more powerful when combined.

The outsourced trading business has grown accordingly. Today, CAPIS serves clients ranging from $100 million
emerging managers to $15 billion institutional asset managers, with strategies spanning long-only to long-short to
sector-specific and beyond. The scope of these relationships has also diversified, with many larger clients seeking to
work with CAPIS in a supplemental capacity, outsourcing only part of their trading.

Amid this growth, the relationship between CAPIS and LiquidityBook has remained highly communicative and
collaborative. LiquidityBook’s client-centric approach shines through at every step, from its responsiveness to its
expert service to its transparent pricing.

“LiquidityBook’s support is the best I’ve ever seen, hands down,” said Viani. “Updates come through quickly and
requests are always addressed in a timely fashion. Their people are as easy to work with as their technology, and
that’s been the case from our first day as a client.”

Looking ahead, CAPIS plans to continue to look to LiquidityBook as a resource in standing up new functionality and
optimizing its approach to technology.

“LiquidityBook gives us the tools we need to build the operational structure we want,” said Krebs. “Our company is
growing and developing strategies so we can keep delivering for our clients long into the future. We see LiquidityBook
as a key piece of that puzzle.”