Smith Barney Selects Reuters' Triarch 2000 Data Distribution System For 800 In New York

Smith Barney, Harris Upham & Co. has selected Reuters to supply it with a digital data distribution system to support some 800 users worldwide. The vendor bested competitors FD Consulting Inc. and Micrognosis Inc. in a final round of evaluations that began with a request for proposal issued in April.

Sources say that Smith Barney has announced its decision internally and to its vendors, though it remains in the midst of negotiating the specific terms of the deal with Reuters. They say that the firm intends to install the vendor's Triarch 2000 digital data distribution system, including the UNIX workstation-based Advanced Trader Workstation (ATW) software and the PC-based Personal Trader Workstation (PTW) software.

In addition, one source says, Smith Barney is considering making use of technology acquired in Reuters' recent purchase of American Real-Time Services Inc. (ARTS) to support traders and salespeople at its branch offices. ARTS, which Reuters purchased earlier this year (TST, April 19), provides a low-end platform for data display and other brokerage applications.

Smith Barney maintains branch-office trading rooms in Atlanta, Boston, Chicago, Indianapolis, Los Angeles, Milwaukee, Minneapolis, Philadelphia, San Francisco, Seattle and Tampa. The firm also has trading rooms in London and Tokyo. Alternatively to ARTS, Smith Barney may opt to support its branch offices by extending Triarch 2000 over a wide area network.

Smith Barney officials decline to comment on any trading technology decisions the firm has made. Sources say that the firm's sense of privacy has intensified of late--in part because of its merger with Shearson Lehman Brothers Inc. They say that a number of non-disclosure agreements are in effect because many of the terms of the merger are still being hammered out.

Smith Barney made its choice two weeks ago Friday, about four days after the firm's scheduled decision date. While sources say the firm's evaluation procedures were not among the most rigorous they have seen, the process nonetheless took its toll on competitors FD and Micrognosis (TST, May 17).

FD's cause was heavily damaged by the discovery of a credit report which said the vendor had six figures worth of tax liens outstanding against it. Meanwhile, Micrognosis managed to flunk two demos.

Smith Barney intends to use the UNIX-based ATW to support its so-called capital markets traders and salespeople, who number about 600. The group includes individuals who deal in fixed-income securities, equities and foreign exchange. The PTW PC-based user interface, running under Microsoft Corp.'s Windows, will be rolled out in support of Smith Barney's 200-strong corporate finance group.

Once the two have come to terms, Reuters' first task for Smith Barney will be to install a 75-position training system at the firm's current 1345 Avenue of the Americas offices. The full-scale rollout will begin at the end of next year, by which time the firm intends to have relocated its offices. Smith Barney has not yet selected its new address.

The new Reuters system will replace a trading room that's now predominantly supported by standalone market data services. The firm also employs a small, early-generation Reuters/Rich Inc. Triarch data distribution system.

In addition to FD, Micrognosis and Reuters, ADP and Teknekron also responded to Smith Barney's request for proposal. ADP's response was based on the Trading Support System (TSS) digital data distribution system which it acquired from Quotron earlier this year (TST, April 5). The bid represented ADP's first foray into the market with TSS.FD, Andersen Consulting

FD Consulting Inc. and Andersen Consulting Inc. have formalized a long-anticipated strategic alliance to sell systems and applications to the trading room.

The new relationship is meant to better enable FD to sell and support its trading room data distribution and display systems to customers the vendor might otherwise have been too small to handle. Meanwhile, Andersen's Financial Markets group gets a data distribution infrastructure and an applications programming interface which it can use to help clients design and build business-specific applications.

According to Andersen's Financial Markets managing partner Joellin Comerford and FD's marketing vice president William Cline, the deal is exclusive only in terms of marketing. Thus, Andersen will continue to work with and install whatever vendors' data distribution systems its customers may desire. However, Andersen will advertise and develop packaged systems using only FD's infrastructure.

FD and Andersen have been creeping up on their strategic alliance for some time. Officials of the two companies say that FD has been teaching Andersen staff about its trading room products for the past four or five months. What's more, the two have co-bid on at least one major project--to provide J.P. Morgan & Co. with a 2,000-position global digital rate distribution system (TST, March 8). Teknekron Software Systems Inc. ultimately won that contest (TST, May 3).

However, though the two have clearly been courting one another--and, in a sense, going steady--for a long time, getting to yes on the issue of marriage was not without its heartaches.

A scheduled, Andersen-sponsored mid-April press conference to announce the relationship (first at New York's Rainbow Room and later at the St. Regis Hotel) was canceled the night before. Neither Andersen nor FD would comment at the time as to what the sticking point was, but clearly it was of some significance.

And now that the arrangement has been formalized, it appears to be somewhat less intimate than some sources earlier anticipated: At one point, these sources say, FD and Andersen had discussed including in their contract a list of FD competitors with which Andersen would be barred from working and a list of Andersen competitors with which FD would be barred from working. Such exclusivity is not a part of the relationship that was ultimately hammered out.

Comerford says that Andersen selected FD because of the quality of its products and its reputation in the industry. She says Andersen seeks "best of breed" partners: While the Financial Markets group continues to look for other software partners--including a portfolio-management system vendor to help target buy-side trading rooms--it will not form an official relationship with another data distribution system provider.

The FD/Andersen deal does not, in practice, mean that the companies will always bid for trading room business in tandem. According to Comerford, the key principle is: "Our clients come first."

Most likely, Andersen and FD will jointly bid to provide a trading room platform when a given project is of sufficient size or global scope to require Andersen's guarantee of support and service. At the same time, Andersen will call on FD to provide "the pipes and sewers"--as Comerford puts it--when one of Andersen's clients seeks Andersen-built business applications but doesn't have an incumbent data distribution platform to support them.

Among the sort of trading room applications Andersen sees itself writing to FD's API are risk management systems and systems to facilitate global trading operations' passing the book, Comerford says.

She says that one of the first orders of business for the two companies--in addition to ramping up FD training sessions and installing FD demos at Andersen offices worldwide--is to determine potential areas of R&D collaboration. Comerford says that the two were fortunate in that their respective development teams were already headed in a similar direction--toward (surprise!) object-oriented systems.

Comerford says that Andersen has also recently hired an FD-dedicated marketing director, Ken Strauss, who was previously a bond trader. And FD will attend Andersen's Financial Markets strategy conference in Paris this June.

Meanwhile, Comerford says that FD and Andersen have targeted between five and ten "promising short-term" business leads.

Andersen's Financial Markets group is a part of the consulting giant's Financial Services division. Financial Services includes three groups, covering the retail brokerage, institutional brokerage and insurance businesses. Financial Markets, which focuses on the institutional investment industry, is worth, Comerford says, about $300 million to Andersen. She says the group employs 4-5,000 people worldwide.

Andersen will have no financial relationship with FD, which is worth $10-20 million a year and employs about 100-150 people. "We don't pay cash," says Comerford. However, the consultancy will donate services, including research and development, support and office space.

Still, increasingly it appears that financial support--whether in cash or services--is a major part of what FD needs these days. FD has been hit lately with criticism, from both competitors and potential customers, about its shaky finances (TST, April 19).

Such criticism reached a peak, sources say, during the hotly contested 800-position trading room RFP contest at Smith Barney, Harris Upham & Co. (TST, May 17). FD and Andersen did not co-bid at Smith Barney--though Andersen had separately done some work for the firm in advance of its trading room platform evaluations. Reuters ultimately won the Smith Barney project (see related story, this issue).