First Boston Rides Reshuffle In Trading-Room System Staff

Despite a series of key personnel shifts and an ongoing internal power struggle between technology-side and business- side executives, First Boston Corp. is plowing ahead with its efforts to get new trading room systems installed at three desks in New York.

The firm and vendors Quotron Systems Inc. and Automatic Data Processing Inc. first announced their intentions late last year (TST, Dec. 16, 1991). Since that time, First Boston chief information officer Charles Mayer says formal contracts have been drawn up and signature is imminent.

Quotron will continue to roll out its Trading Support System (TSS) running on Sun Microsystems Inc. SPARCstations at FBC's fixed-income trading desk. And ADP will go ahead with its installation of its DOS-based 486 microprocessors running a stripped-down version of FS Partner AF in First Boston's equities trading and investment banking operations.

But however settled those installations may be, it's still unclear what will become of FBC's efforts to put together a platform for its proprietary trading applications. In this area, the firm currently has a melange of systems -- supporting derivatives trading, convertibles trading, block trading and index arbitrage -- which it would like to migrate to a single platform.

Though the proprietary trading group represents a rather small portion of FBC's total trading room systems positions, the issues and events surrounding it appear to have had a disproportionate impact on decision-making at the firm as a whole.

According to Mayer, FBC has always planned on gradually shifting control of its various trading system developments from the information systems technologists to the traders themselves. But if events in the proprietary applications area are any indication, the shift has begun to happen a lot less gradually than anyone expected.

Sources say that when Mayer took over from his predecessor Gene Bedell, he decided to change the organizational chart, putting one information systems executive at the head of each of the three main trading areas. But now, just as Mayer and his staff have begun to achieve their goals -- or at least to settle on a plan for each of the three trading areas -- his organizational chart has begun to come apart at the seams.

Perhaps the most significant disruption involves the reassignment of Roml Lefkowitz, who had been Mayer's head of information systems for equities -- including the proprietary trading applications. Lefkowitz, who didn't return phone messages left for him at First Boston, is still with the firm "developing internal productivity software" for information systems staff to use "internally," says Mayer. Mayer declines to elaborate further.

At the same time, Isaac Putterman, who was head of fixed- income systems development under Mayer, resigned from the firm at year-end, according to Mayer. Other FBC sources say Putterman was dismissed. None of the sources contacted by TST would say where, or whether, Putterman has been employed since he left FBC. Prior to working at First Boston, Putterman was with Shearson Lehman Brothers Inc..

The only one of Mayer's triumvirate still in place is Frank Fanzilli, charged with overseeing systems in the investment banking department. Fanzilli couldn't be reached by press time. But sources say investment banking places less complex demands on its systems developers, and generally follows the lead of equities in terms of platform at First Boston.

Though details of the departures are sketchy -- and Mayer had little to say about what lay behind them -- he did indicate to whom the power had shifted. In the case of Putterman, it seems to have gone nowhere; a search is ongoing, says Mayer. In the case of Lefkowitz, it went to Lefkowitz's main user -- William Cook.

Quantitative trader Cook is something of an outsider at FBC. Formerly of Morgan Stanley & Co., Cook left that firm in 1988 to found Tech Partners Ltd. for the sole purpose of doing proprietary automated trading on its own account. Then, in 1990, sources say, Cook was looking for new investors for Tech Partners, and First Boston became Tech Partners' largest single investor (TST, Jan. 14, 1991). As part of the deal, Cook signed a personal services contract with the firm, becoming a managing director and agreeing to lead the firm's equity derivatives trading desk.

Mayer says that Cook now leads technology development not merely for the firm's proprietary and derivatives traders, but for all of First Boston's equities trading operation. Under Cook are what Mayer describes as a combination of business-side and technology-side staffers.

Now in charge of the proprietary trading applications is Matthew Lavicka, who, like Cook, formerly worked at Morgan Stanley and at Tech Partners.

Cook couldn't be reached for comment at press time. Lavicka declines to comment. But other sources say that Cook has thrown his full support behind a UNIX platform for the derivatives and proprietary trading applications. And right now Lavicka is basing his tests on Sun SPARCstation workstations and servers.

Sources say such commitment marks the end of a long flirtation with NeXT Computer Inc. as a possible platform for the equities installation. The NeXT pilot was to distribute Telekurs (North America) Inc.'s Ticker data feed, using Teknekron Software Systems Corp.'s Teknekron Information Bus digital feed handling and workstation software running in the NeXTstep graphical user interface environment (TST, June 17, 1991). Sources at the firm say that the last NeXTs are in the process of being removed from the trading floor.

The failure of NeXT to take root at FBC has been the source of much speculative, and some cynical, comment at the firm -- particularly in light of the fact that FBC's own Tokyo office lately opted to give NeXTstations to its derivatives and index arbitrage traders. One source says that in the final analysis, the main reason NeXT didn't take hold at FBC in New York was because Cook felt more comfortable using Sun. Grumbles another: "Anybody who ever supported NeXT has either left the firm or been fired."

Newcomer Lavicka is now managing a horserace to select a platform and real-time market data feed for the proprietary trading applications. Sources say there are three main contenders, all of them to run on Suns. Quotron is pitching Trading Support System, fueled by its as yet unreleased QMDF market data feed. Meanwhile, FD Consulting Inc. and Teknekron are pitching, respectively, the MIPS and TIB local data distribution software systems, served by Telekurs' Ticker feed.

Sources say Lavicka has asked Teknekron and FD to match a Quotron offer to install their pilots free of charge.

Telekurs' Ticker feed is handled by an old FD TiPS ticker plant running on a Stratus Computer Inc. processor. Most sources at FBC point out that the FD ticker plant has undergone so much tweaking at the hands of First Boston techies over the years that it doesn't give FD a significant foot in the door.

The Telekurs Ticker currently also feeds certain back- office transaction processing departments, running, among other things, the remains of Seer Technologies Inc.'s HPS system. Seer is First Boston's joint venture with IBM.

Sources say that Mayer is predisposed toward eliminating any applications that run on a mainframe. Mayer himself confirms this, noting that running such systems is too expensive. He says, however, that this doesn't mean necessarily that Telekurs' days are numbered at FBC. He says that the Ticker feed could well be shifted to another hardware platform.

At the same time, sources point out that there are other market data vendors, such as McGraw-Hill Inc.'s S&P ComStock, as well as other systems integrators, such Kapiti PLC, lurking in the background.

One source notes that Quotron's TSS may have the most commanding edge because it comes equipped with its own feed, QMDF. But the unlaunched QMDF is an unknown quantity and it remains to be seen whether it will be acceptable to First Boston.