Former Hutton Systems Team Targets New Venture At Smaller Firms; International Thomson Kicks In Start-Up Financing

A group of former E.F. Hutton & Co. executives plans to found a new company to provide market data and branch automation to smaller and regional brokerage firms. International Thomson Organization, Ltd., which was foiled last year in its attempt to purchase quote vendor CMQ Communications, Inc. (MTR, November 1987), will provide the start-up funding, says a source close to the project.

The chairman of the new company -- tentatively called ILX -- is former Hutton technology chief Norman Epstein. The president is Bernard Weinstein, who masterminded Hutton's now-moribund AWE (advanced workstation for the executive) project. Others involved in ILX, sources say, include Robert Fitterman and Milton Melamed, both of whom worked for Weinstein at Hutton.

Weinstein won't comment on his plans. "It's such a preliminary level at this point -- it's almost a brainstorming level," he says. "A lot of things still have to be worked out." Robert Hall, who heads Thomson's International Financial Networks (Infinet) group, couldn't be reached.

Since Hutton was acquired by Shearson Lehman Brothers, Inc. last year, the AWE project has been in a coma (MTR, January 1988), and although Shearson sources insist a final go-no go decision hasn't been made, chances for its resuscitation appear slim. The ILX service, while expected to incorporate many features of AWE, won't directly use any of its technology, much of which is still owned by Track Data Corp. "If I do do this, I'm not planning to take any technology that was developed before," says Weinstein.

Whether the world is clamoring for yet another quote vendor in an already crowded field isn't clear. Sources familiar with ILX say Thomson has agreed to invest $4-6 million in the project over the next two years. The new company is expected to work closely with Infinet's Autex Systems, Inc. unit, which provides an institutional block trading service.

Autex is currently planning to construct an interactive Ku-band satellite system, which would furnish the communications backbone for ILX and other Infinet services, including Technical Data Corp. and First Call Corp. Sources say Thomson plans to place Autex under the control of Technical Data chairman Jeffrey Parker in the near future.

The focus of the ILX effort, sources say, will be an advanced IBM PC-based account executive workstation delivering a full range of U.S. exchange data. Whether the company will build its own ticker plant or buy a feed from a third party isn't yet decided.

Target customers for the service include retail firms with 3,000 or fewer terminals and the institutional sides of larger firms. Several companies, including Unisys Corp. (MTR, March 1988) and Standard & Poor's Trading Systems, also have their sights set on selling branch systems to smaller firms.

The perception that smaller firms constitute a distinct market segment with peculiar needs is a new one. Historically, small firms have been served by the same vendors with the same systems as large firms. Now, however, marketers reason that the kinds of systems being ordered by the Merrills and Shearsons of the world are too complex and expensive for small firms, which nonetheless need to migrate to a new generation of technology in order to remain competitive. ILX is betting it can deliver greater functionality at a lower price.