Shearson Reshuffle Leaves Gott Heading Worldwide Trading Systems

A wide-ranging reorganization of American Express Co.'s information groups has left Shearson Lehman Brothers Inc.'s Stephen Gott in charge of an implementation of new workstations -- Sun Microsystems Inc. SPARCstations, according to sources -- in the firm's Lehman Brothers trading operations worldwide. Gott's elevation appears to come at the expense of a group of executives involved last year in a rocky over-the-counter equity trading installation in New York.

Lehman intends to develop a firmwide trading-room system platform using Sun workstations running UNIX. The firm has already installed parts of the platform at its New York taxable fixed-income and OTC equity trading desks in New York, and is currently implementing the platform worldwide.

Gott was responsible for building Lehman Brothers' taxable fixed-income trading desk in New York several years ago, sources say. That system, the sources say, delivered video- based market information services via a Micrognosis Inc. video-switch and digitally delivered internal pricing data to Sun workstations.

These sources say he is currently completing a similar installation of as many as 1,000 Sun SPARCstations worldwide to support the firm's fixed-income traders. The Suns will supplement Micrognosis video-switches installed at several sites around the world.

Sources say the fixed-income project is utilizing Sybase Inc. relational database management systems to support development of proprietary analytics, which are being created by traders using a number of applications programming interfaces, including one provided by Micrognosis.

Once that project is completed, sources say, Gott will tackle what some say is a trickier proposition: the implementation of a Sun/UNIX platform to support the firm's listed equity trading operations.

Former top information systems director previously in charge of equity trading support, Richard Morrison, this year moved over to a separate business group at American Express, Shearson's parent. Morrison ceded some of his trading-room systems responsibilities to Gott, sources say.

American Express has organized its Shearson Lehman Brothers broker/dealing operation into two separate divisions. The firm's recent reorganization of its trading group reflects the broader reorganization.

The company's Lehman Brothers division is involved in fixed-income and equity trading worldwide, along with merchant banking, underwriting and other functions. The Shearson division is responsible for its consumer broking and sales effort along with other functions.

Gott has now been made chief technology and operations officer for Lehman Brothers -- an appointment that has put him in charge not only of the firm's trading technology operations worldwide but also of the firm's back-office functions as they relate to Lehman Brothers. Sources say Gott is determined to do for listed equity traders what wasn't achieved in Lehman's ill-fated OTC desk implementation -- the reduction of hardware on traders' desks to a single platform (TST, April 8).

Assisting Gott in his task, among others, will be Jonathan Beyman, who helped Gott on Lehman's taxable fixed-income implementation. Also assisting Gott will be Steve Silberstein, a former Bridge executive, who will have direct responsible not only for the worldwide equities implementation but also for a commodities trading room system project.

Meanwhile, technology support for American Express's Shearson division has been spun out of the firm almost entirely. Sources say that support for the firm's data processing is now being handled by American Express's Information Services Co. unit, headed by former Automatic Data Processing Inc. executive Ric Duques.

Duques' ISC umbrella is comprised of some nine separate business units, several of which have been recently formed and which together comprise a billion dollar company. Under Duques is Morrison -- now in charge of technology planning for all business units of ISC, sources say. Jerry Callaghan, a former Bear Stearns & Co. executive, heads ISC's new Securities Information Group, which handles the data- processing and front-end technology support. Meanwhile, two staffers involved in Lehman's OTC implementation -- David Sherr and Ken Boyles -- have also moved over to SIG.

Under Gott, sources say, Lehman will move ahead with an in- house implementation of a Sun-based trading platform similar to that developed for its OTC desk. Initially, Lehman will apply the platform to its listed equity trading operation in New York, and later to its equities trading activities worldwide.

It is likely that the Sun implementation in listed equities will use a new generation of Sun machines running UNIX, X Windows and the Motif graphical user interface. Trader workstations will be linked via Ethernet local area network running TCP/IP. In New York, the Sun workstations will replace a variety of native equity terminals, including Quotron Systems Inc., Bridge Information Systems Inc. and other vendors' terminals.

But the new implementation will not include Teknekron Software Systems Inc.'s digital feed-handling software, which was used in part on Lehman's OTC desk. Lehman, sources say, will develop feed-handling software in-house under the direction of Silberstein. Teknekron had provided feed- handling and presentation software to handle the National Association of Securities Dealers' NASDAQ Digital Interface Service for Lehman's OTC equities desk.

The OTC workstation project aimed to provide traders with access to the NASDAQ DIS and other market data services through a single keyboard. Two years after the project began, Lehman traders continue to access NASDAQ data on a separate terminal and keyboard.

According to sources close to the installation, at least part of the failure of the project is attributable to problems with the Teknekron Information Bus digital feed- handling software. As a result, sources say, Lehman decided to develop its own digital feed-handling software to support its worldwide equities trading operations.

Some sources say that the OTC implementation also suffered from difficulties not associated with Teknekron's TIB. Teknekron executives, meanwhile, defend the company's performance at Lehman, pointing out that Teknekron continues to work with Shearson Lehman Brothers.

"Both Teknekron and Shearson feel the (OTC) installation was a success and they continue to utilize the technology and software that we installed," says Norman Siegler, chief financial officer for Teknekron. "We continue to do work for them and we look forward to expanding our relationship."

Lehman is expected to test some other workstations besides Sun. But "they're pretty wedded to Sun," says one source close to the planned implementation. "The OTC installation was over 50 positions and they don't see any reason to move away from Sun in the near future."

Sources caution that Lehman's equity installations may pose a challenge to Gott. Gott's previous in-house integration efforts have tended toward historical and video-based information distribution, rather than digitally delivered data covering large groups of financial instruments and feeding real-time analytics. But, "Gott has gotten the job done in the past," says one source who used to work at Shearson. "He's certainly a competent, hard-nosed guy."

In addition to the worldwide equity implementation, Lehman has developed a suite of proprietary analytics -- known as Impact -- for its fixed-income securities trading operation in New York (TST, May 20). The development has integrated Lehman analytics with services offered by EJV Partners L.P. -- the project designed to bring together the analytics resources of six primary dealers, including Shearson, and eventually offer them to institutional customers. Impact will allow the firm's fixed-income traders to run Lehman and EJV proprietary analytics on Sun workstations running UNIX.