Cantor Buys Up Most Of PI, Including CARO And Staff

Cantor Fitzgerald L.P., the newly restructured Cantor Fitzgerald Inc., has acquired the source code to PI Systems Ltd.'s product line, and has hired five of PI's support and development staff, including PI founder and former chairman Marshall Caro. Though terms of the deal weren't disclosed, sources say it marks the end of PI Systems (formerly Programit Inc.) as a provider of local data distribution systems.

As part of the deal, Cantor has assumed responsibility for the support of all but two of PI's existing stable of about 15 customers. The two former PI clients that Cantor doesn't support are fellow interdealer brokers Tullett & Tokyo Forex International Inc. (TST, June 17, 1991) and Bierbaum Martin. Both already use PI software to facilitate delivery of prices to their brokers, internally, and to Telerate.

Sources say Cantor's deal with PI left to the discretion of the IDB which clients it would continue to support and which it would attempt to dispose of otherwise. By that token, it opted not to support Tullett and Bierbaum. Rather than continue to support the two, Cantor and PI sold them the source code for the products they use. At the same time, both Bierbaum and Tullett have hired ex-PI support staff.

Caro has assumed the title of director of information technology at Cantor. He and other officials at Cantor decline to comment on the terms and goals of the deal. But other sources say that PI will no longer undertake to seek new customers. PI dismissed its four-person sales and marketing staff when its new arrangement with Cantor was initiated.

In name, PI Systems now exists only as a much-diminished entity of which Caro's wife is the last remaining officer, sources say. Its former premises have been vacated.

PI's lead product is known as NetI, for Network Interoperability (TST, Aug. 15, 1988). The system makes use of terminal emulations to provide a relatively inexpensive means of distributing market data across a local area network to workstations running disparate operating system platforms.

Since it debuted as a system providing shared, heterogeneous access to PC-based systems, PI has enhanced NetI's functionality. It now provides the same level of access to analytical applications running under UNIX, as well (Investment Management Technology, May 29).

The latest release of NetI allows users to import data from the network to Lotus Development Corp. spreadsheets and publish the results across the network. Users can also create their own analytics using the data and likewise publish those results.

Sources say Cantor -- which has not in the past had a reputation for being among the most high-tech interdealer brokers -- took steps to cozy up to PI based on the experiences of Tullett and Bierbaum.

Bierbaum has been a customer of PI for about six years. Tullett has been using PI systems for about two years (TST, June 17, 1991). Both firms will continue to use the software for the foreseeable future, sources say. A Bierbaum source, however, says that a rethink may be imminent at his shop.

Sources at all three IDBs say there are two principal benefits to the PI software -- both of which address the IDBs' increasing desire to gain independence from the vendors that redistribute their prices, such as Reuters and Telerate.

First, because NetI allows a firm to distribute its own prices in an dynamic format, it can enable that firm, and its branch offices, to decrease their reliance on prices delivered by Reuters and Telerate.

Second, NetI enables data-contributing firms, such as IDBs, to deliver fully configured pages of data to vendors for redistribution. Bierbaum, for example, has used NetI to deliver two pages of self-configured prices and commentary to Telerate for six years.

Because the pages are configured by the IDB, rather than by a third party, the IDB is in a better position to turn around and market the pages to other vendors, should it wish to do so.

Among other customers of the former PI are Bernard L. Madoff Investment Securities, Goldman Sachs & Co. and Dean Witter Reynolds Inc., all of whom have made use of PI systems in implementing a trading room platform for their over-the-counter equities traders.

That PI should play a role in Cantor's relationship with the likes of Telerate is ironic. Back when it was still known as Programit, the vendor was hauled into court by Telerate, the core of whose market data service is provided by Cantor.

Telerate had charged that Programit's Excel-A-Rate page-caching and redistribution system violated copyright law. The system allowed users to replace their Telerate terminals by installing a microcomputer-based gateway capable of delivering Telerate data to customer terminals without additional payment to Telerate.

A U.S. District Court judge issued an injunction barring Programit from selling, manufacturing or distributing the Excel- A-Rate software (TST, June 20, 1988).