Natwest Extends Scope Of New York RFP, Combines PLC, County Units For TRS Project

On the eve of selecting a vendor to supply it with a 140- position trading room, the New York branch of National Westminster Bank PLC (NatWest PLC) has upped the ante -- bringing sister-firm County NatWest Securities USA (County NatWest USA) on board, and lifting the total positions covered by the impending deal closer to 200.

The decision to have the two units work together to meet their trading technology requirements appears to have been made possible by an ongoing corporate reorganization that began to take shape late this spring at NatWest's London headquarters. Sources close to the bank say that for all administrative and operational purposes, County NatWest Securities is no longer a separate entity from NatWest PLC, the bank.

These sources speculate that the two entities' traders will be consolidated at a single facility at NatWest PLC's offices at 175 Water Street, although that couldn't be confirmed by press time. Most of County NatWest USA's trading population -- a considerably smaller group than that of NatWest PLC -- are located at 100 Wall Street; some are housed at 175 Water, and sources say there's plenty of room there for more.

The ongoing restructuring put responsibility for most trading operations under executive Martin Owens. Previously, Owens oversaw trading operations only for NatWest PLC's so-called capital markets group, leaving equity trading at County NatWest Securities in the hands of other executives.

The move also signals an important turning point for NatWest's technological corporate culture. One trading systems executive close to both the NatWest PLC and County NatWest sides of the fence describes the two operations as having until recently been separated by "a tremendous technological divide and warfare." The result, according to the executive, has been several years of "technological impoverishment."

The bank's London headquarters opted to unite the two New York trading operations late last week -- about two weeks after NatWest PLC in the U.S. was originally scheduled to award its contract. Sources close to the trading room project at NatWest PLC in New York say that the original request for proposal issued by the bank in early May (TST, May 4) will continue in force -- despite changes to specifications.

At press time, PLC system staff were putting together the new specs and negotiating final approval from London of its decision on the winning vendor. Officials decline to comment on exactly what that decision is, noting only that the change in number of seats will not likely affect the criteria by which the bank will select the vendor.

In late May, a third New York unit of NatWest, National Westminster Bank USA (NatWest USA), selected Reuters' Triarch 2000 to support a planned 120-position trading room in New Jersey (TST, May 18).

Sources say that the bank has selected Sun Microsystems Inc. SPARCstations running UNIX as the platform for at least some of the traders. Sources say the bank had also considered X terminals, as well as UNIX-based processors from Digital Equipment Corp., Hewlett-Packard Co. and IBM. DOS-based microprocessors will likely also play a role in the installation.

Among vendors that submitted proposals to NatWest PLC are British Telecom North America Inc., FD Consulting Inc., Kapiti PLC, Reuters and Teknekron Software Systems Corp. NatWest PLC's staff will likely continue to manage the enlarged project.

A number of sources close to the project say the bank has been slow to announce a winning vendor because PLC system staff and consultants on the project Walsh-Lowe & Associates Inc. are backing different horses. These sources say that without the support of the outside consultants, the systems staff has had a much harder job convincing the bank's top executives that his choice is the better one.

Sources speculate that the PLC team have set their hearts on Reuters' Triarch 2000, front-ended by a mix of UNIX-based Sun SPARCstations and DOS/Windows-based microprocessors. Such a system would make use of Effix Systemes S.A. Advanced Trader Workstation software as well as Reuters' own PC-based Personal Trader Workstation software.

That route would have the advantage of bringing all three NatWest units in the New York area under the same technological umbrella. It would also explain the difference of opinion between NatWest PLC technology staff and Walsh-Lowe: While the consultants were asked to look only at the installation at hand -- that is, as defined by the specifications detailed in NatWest PLC New York's RFP -- the bank's tech staffers clearly must take a broader view.

That broader view includes not only the fact that sister-firm NatWest USA recently picked Reuters for a trading room of similar size, but it also takes into account the political temper of the parent company in London. And in London, unity seems to be the order of the day.

A Reuters decision would also sit with what sources say is the emphasis NatWest has placed on selecting a vendor with a large and easily accessible maintenance and support staff.

Sources say the bank entertained proposals featuring a mix of any of three types of trader display device. For high-end users, the bank sought a 20-MIPS RISC-based workstation with 32 megabytes of RAM. For mid-range users, a less-powerful workstation or a 486 microprocessor were deemed acceptable alternatives. Low-end users were set up for terminal or X- terminal access.

Sources say NatWest sought bids utilizing either Ethernet or Token Ring local area networks. Systems were required to be fault-tolerant and to provide for minimal on-site backup facilities.

The system will provide access to data feeds from Knight- Ridder, Reuters and Telerate, among others, sources say. In addition, they say, NatWest wants to give its traders the ability to create, store and distribute pages of internal pricing data. To this end, the workstation software would also include an applications-development toolkit.

An ability to communicate with NatWest's back-office systems was also a requirement, sources say. NatWest has purchased a global license to the Remos foreign-exchange/money market deal- capture, position-keeping and risk-management system (TST, May 4). Marketed by Bankers Trust Co.'s BT Financial Services Information Systems Inc. unit, Remos runs on a DEC VAX/VMS platform located in Huntington, N.Y.

A separate RFP for telephony was issued in parallel to the market data distribution RFP. Sources say that BT and IPC Information Systems Inc. are the two finalists for that piece of the business.

If Reuters wins the two additional NatWest rooms in New York -- and that remains an if -- the vendor would have gone a long way toward finally expunging the ugly memory of what has come to be known as "the NatWest debacle."

More than two years ago Reuters suffered excruciating embarrassment when it failed to get a so-called ISN (information services network) up and running on schedule for 400 traders in the London offices of County NatWest Securities Ltd. (the London sister firm of County NatWest USA) and NatWest Investment Bank (TST, Oct. 9, 1989).

The ISN system was to have used Reuters' own Triarch Intelligent Workstation software running on Sun 386i workstations. (Reuters has since entered into its partnership with Effix, which has given it the high-end workstation for Triarch it had long sought.)

Thereafter, NatWest entered upon its 40 days in the technological desert. The sharpest evidence of the former rift between the capital markets trading operations and the equities trading operation came to light last fall. A management reshuffle at the parent company iced County NatWest's then-much-vaunted plans to build a high-powered proprietary trading group in London and New York. The securities firm hired Gregory Kipnis and a staff of 75 others to build the system; it was to run on a Sun/UNIX platform and would likely have made use of local data distribution and workstation software from FD or Teknekron. Last fall, however, the parent company cashiered the whole project, as well as Kipnis and 30 of his colleagues (TST, Oct. 7 1991).

Since then, NatWest's London trading operations, like its operations in New York, have utilized video-switching technology.