DIS'S 1996 IN REVIEW

It's hard to believe. The heavens didn't open. The earth didn't move. But on the first of January, AAP Information Services and Reuters Australia did manage to part ways with a minimum of fuss. The divorce ends a ten-year exclusive distribution agreement that kept Reuters out of direct sales in Australia and AAP out of direct sales everywhere else.

"All systems go," says Craig MacIvor, AAP's executive director for the financial markets services division. "It was a very smooth transition." Despite the cool and collected faces that both vendors managed to present to the market, the handover also puts an end to many months of arduous preparations and hours of frequently painful negotiations. For much of the past year, customers down under have been reaping the monetary benefits of the price war that broke out as vendors scrambled to secure market share in advance of the bust-up.

Xinhua, the Chinese government news agency, made front page headlines the world over when it announced on January 16 that it plans to begin "supervising" foreign financial information providers' business in China. Under new powers granted it by China's State Council, Xinhua will force financial information vendors to enter into joint business agreements that require the vendors to share an undisclosed portion of their revenues.

Xinhua, which has widely been reported to be strapped for cash and under orders to wean itself from government subsidies, justified the measures by citing security concerns. Xinhua's plans also call for it to take a cut of revenues from electronic dealing services, such as Reuters' Dealing 2000-1 and 2000-2. Raising the spectre of censorship, Xinhua says it will monitor foreign news stories and take steps to punish any vendor that reports news that is harmful to China's interests.

For an update to this story see D&IS, April 9, 1996.

National Australia Bank is reducing its use of Reuters' information services by 90 percent in a move that will allow the bank's treasury group in Australia to slash its total market data expenditures by more than one quarter during the year. NAB's plans calls for Dow Jones Telerate to supply the bulk of the bank's financial information, with Knight-Ridder supplementing Telerate's data and providing news as well.

NAB's efforts to wring savings from its market data costs is the latest--and among the boldest--in a series of efforts by a number of banks in the region. While other banks--including Bankers Trust and Hongkong and Shanghai Banking Corp.--have managed to reduce costs by yanking Telerate services, none before have managed to so drastically reduce their reliance on their primary information provider.

Banque Paribas last month completed the installation of a new 150-position trading room in Tokyo that features Microsoft Corp. Windows NT-based file servers, Midas-Kapiti International's Fist data delivery system and a dealerboard voice system from Etrali. Following a test period, the bank also plans to deploy NT-based workstations on traders' desktops in Tokyo and throughout its trading rooms worldwide.

The Tokyo trading room conforms to global systems specifications that Paribas is implementing worldwide. At the end of a phased global rollout, the banking group plans to have virtually all of its traders' market data and applications integrated onto three-monitor desktops with Windows NT-based PCs. Paribas has over 800 traders worldwide, most of whom currently have two computers on their desks--a PC running Windows 3.1 and a Digital Equipment Corp. VAX/VMS-based Vaxstation.

Most of the various ING and Barings operations in Singapore are slated to be united at a single site this June. The system plans for the new space have yet to be finalised. According to sources, the combined group currently intends to bring existing systems along when it relocates, however. At present, the bulk of market data used by the combined firm in Singapore is supplied by Reuters. It is delivered to end-users via the vendor's Selectfeed Plus digital data feed and the Triarch distribution platform to PCs running Reuters Trader Workstation (RTW) software.

The bank's initial plans are to build and outfit a new, 35-position trading room in Singapore, leaving ample room for expansion. It will occupy some 30,000 square feet of space spread across two floors at Republic Plaza, sources say. The relocation effort is designed to bring the various ING Barings business units under one roof, and to provide each of them room to expand.

Hongkong & Shanghai Banking Corp. last month turned off the Dow Jones Telerate digital feed that was supplying its 160-position Hong Kong trading room. The bank now relies on Knight-Ridder Financial and Reuters as its two main data sources, a move that it expects will significantly reduce market data costs. Now that the cutover has been completed in Hong Kong, several other HSBC centres plan to evaluate similar initiatives.

Mike Powell, head of HSBC's interest rate group in Hong Kong, says that each centre's data requirements will be determined on a case-by-case basis, and that such decisions will be made locally. "At smaller sites like Mauritius, Karachi and the like, it's probably not worth doing," Powell says. "But the major centres will go through the process of evaluating" the merits of changing their market data mix, he adds.

SBC Warburg has just about finished installing Reuters' Triarch digital data distribution system to support all 120 positions in the newly merged Swiss Bank Corp. and S.G. Warburg offices in Hong Kong. The bank is removing an in-house digital data delivery system based on Micrognosis' Mips platform that it has been using to support its trading activities there.

According to Tim Marsh, regional head of IT at the merged bank, SBC Warburg's decision to put Triarch in its merged Hong Kong, Singapore and Tokyo trading rooms is entirely separate from a broader, ongoing bank effort to determine a standard global market data delivery platform. Marsh says that effort is being conducted by two evaluation teams in London and New York. The resulting global standard platform will be deployed at the merged bank's largest trading centres in London and at its under-construction US headquarters in Stamford, Connecticut.

Money broker Prebon Yamane has given new life to plans to deploy a digital data delivery platform in its Hong Kong and Singapore offices. The two offices had reached a preliminary agreement with British Telecom's Syntegra subsidiary to install the vendor's Open Trading System platform across Asia last year--only to put that agreement on hold when they learned that IT staff at headquarters were evaluating systems for a global rollout.

After pitting OTS against three other platforms during extensive evaluations conducted in the US, Prebon has now decided that it likes OTS after all. The implementation of OTS will involve over 700 brokers' seats in some 20 offices around the world and will be handled by Syntegra. The affirmation will give a welcome boost to OTS and Syntegra in Hong Kong and Singapore where OTS is installed at only a handful of sites.

The merger of the Electronic Broking Service and the Minex foreign exchange electronic broking operations were completed last week with the shutdown of the Minex service. When Minex was switched off, most of its customers shifted to EBS, according to EBS officials.

The Minex-EBS merger was announced late last year, but was long expected. Both Minex and EBS competed with Reuters' Dealing 2000 electronic transaction service in a market that many observers suggested could not readily support three competitors. Minex was being used at 150 sites world-wide--with the great majority in Asia/Pacific. This compares with EBS' 400. Of the Minex sites, some 50 per cent were also EBS users, a fact which eased the transition, officials say.

Xinhua, China's state news agency, will be exacting a seven per cent cut of the gross revenues of all financial information sold by foreign news and data vendors in China. That's considerably less than the 40 per cent levy cited by Xinhua officials when the agency first announced that it had been granted the authority to require foreign information vendors to enter into business agreements with Xinhua in order to continue doing business in China.

In the meantime, it remains unclear whether the seven per cent fee will be levied on all the various products and services provided by foreign information vendors in China. In past statements, Xinhua officials have indicated that transaction services such as Reuters' Dealing 2000 would clearly fall under their jurisdiction. Says Philip Melchior, Reuters' managing director for East Asia, "We're in regular contact and are mildly encouraged. We've moved some distance from the worst case scenario."

Bankers Trust is in the midst of a global rollout of a virtual private network to handle long distance telephone and fax communications between nearly all of the bank's 1,750 traders and their counterparties. The VPN also provides internal video-conferencing on the desktop and remote networked PC access for corporate clients. By negotiating a global deal and shifting its private lines to a VPN, the bank expects to slash its annual telecomms costs by one-quarter.

The VPN, which is provided by Sprint, the US-based long-distance carrier, supports most of Bankers Trust's 14,000 employees worldwide. In Tokyo and Hong Kong, Sprint provides VPN service to Bankers Trust by connecting the branch office PBXs in those offices with the VPN over a leased line, says Jeff Dubelick, Bankers' vice president for global telecommunications.

As part of a push to greatly expand its presence in Japan, Deutsche Morgan Grenfell is building two new trading floors that will accommodate more than twice the number of positions the bank currently supports. The new rooms are scheduled for completion in June and will be outfitted with Windows NT PCs, Novell-networked applications and Unix-based IBM RS/6000 and Sun Microsystems' servers and workstations.

The expanded 220-position Tokyo room will also be equipped with a revamped version of Reuters' Triarch digital data distribution system. DMG will also deploy Open Bloomberg on its NT-based trading room PCs, largely to accommodate newly recruited traders already familiar with Bloomberg products. DMG has a complement of 30 people handling the new room's IT requirements, most of whom were hired within the past few months.

Union Bank of Switzerland has brought its Singapore and Sydney operations more closely in line with the bank's global standard for trading room systems. As of late last month, both rooms were outfitted with Reuters' Triarch digital data distribution system and a Reuters' Prism video switch. Reuters' Triarch replaces the Multiview system that was installed at the two UBS sites several years ago.

The approximately 100-position Singapore trading room is UBS' regional headquarters. Late last month, UBS completed the shift from Multiview to Triarch at its 35-position trading room in Sydney. Sources say the migration timetable was accelerated after Multiview's developer, UK-based Financial Data Services, announced late last year that it was filing for voluntary liquidation.

When Morgan Stanley Japan moved its 700 staff into a single building in Tokyo earlier this year, the firm offered traders little new to learn except the route to their new space at the Yebisu Garden Palace facility. That doesn't mean there wasn't anything that was new behind the scenes though, including the firm's very own electrical substation.

Under a relocation philosophy Morgan Stanley Japan's project director Bob Barden describes as "WYHIWYG, or What You Have Is What You Get," the firm moved all its existing data systems into three new trading rooms at Yebisu Garden. That meant PCs and Unix workstations used by trading room staff were hauled out to the new site the weekend of the move. Real-time digital data is being distributed to trading room desktops either via Morgan's internally developed delivery system or Telerate's Trading Room Systems platform.

As expected, Knight-Ridder and Welsh Carson Anderson & Stowe announced recently that they had come to terms to make the venture capital partnership the next owner of Knight-Ridder Financial. However, much of the market data industry was taken by surprise by the news that Welsh Carson had agreed to fork over $275 million for the unit. Although Knight-Ridder was asking $400 million, the unit was not expected by many observers to fetch as high a price as it did.

Knight-Ridder Financial offers several pieces previously missing from the WCAS/GFI puzzle. These include a news organisation, a substantial customer base outside North America and foreign exchange, money market and derivatives data.

GFI includes equity-oriented data and analytics provider Bridge Information, bond data and analytics provider EJV and the digital data delivery software vendor Market Vision.

Midas-Kapiti International has acquired Financialware, a Sydney-based trading and risk management software house. Terms of the deal were not disclosed. MKI will initially market Financialware's core product, the Plato deal capture and position-keeping system, in the Asia/Pacific region, Midas-Kapiti officials say. The vendor also plans to integrate Plato with the rest of its product line.

Brett Hodge, head of sales and marketing at Financialware, says the acquisition is "good for both companies. Plato will have a chance to go global." In turn, Hodge says Midas-Kapiti needs a deal capture and position-keeping system to complement its existing back office applications, and Plato is a good fit in this regard.

Commonwealth Bank of Australia's plans to deploy California-based ADS Associates' Global Trader trade capture and risk management system have been delayed due to unforeseen technical difficulties, according to internal CBA documents obtained by D&IS. Specifically, during Global Trader's initial pilot test in Melbourne on a networked, Microsoft Windows 3.1-based platform, client-side desktop PCs began crashing.

Last June, ADS and Commonwealth signed a global licensing agreement to deploy Global Trader on as many as 300 workstations and PCs, according to the bank and vendor. Originally, the bank's deal management system steering committee planned to deploy Global Trader at its Melbourne, Sydney, London, New York and Singapore trading centres. Commonwealth plans to use the system for real-time trade capture and credit limit and market risk management for its foreign exchange and money markets groups.

For an update to this story see D&IS, December 2, 1996.

Some of Asia's largest regional securities firms have given their blessing to a research clearinghouse that will be owned and operated by a Hong Kong-based unit of Primark, the US-based financial information conglomerate. The electronic warehouse, which is still under development, would serve as the exclusive conduit for all research documents published by participating brokers. To promote broad distribution of said research, any vendor will be permitted to collect research from it, albeit for a fee.

Jardine Fleming, HG Asia and HSBC James Capel are among those endorsing the initiative, which could either revolutionise the business model for research distribution and re-define the concept of data ownership, or simply insert an unnecessary layer of costs into a model that already works pretty well.

Reuters' first half results paint a rather gloomy picture for the Asia/Pacific region. Asia's revenues were up just five per cent as Japan revenues fell ten per cent at comparable currency rates while Hong Kong's revenues remained fickle. Only Southeast Asia was singled out for praise in the vendor's financial report. Still, Reuters' five per cent regional sales growth puts it well ahead of Telerate in Asia, which posted a five per cent sales decline according to its latest earnings release.

Regionally, Asia/Pacific revenues grew five per cent to US$392 million, with contribution up six per cent to $152 million. On a more detailed level, the revenue figures show that transaction services were the star performers. Within this group, Instinet revenues grew 51 per cent, exclusive of currency effects, while Dealing 2000-related revenues increased 12 per cent. Although communications costs rose 10 per cent to $163 million, increases in data costs slowed to 18 per cent as compared to 38 per cent during 1995's first half.

BZW Barclays has united its equities, capital markets and treasury traders at a single, newly outfitted facility in Hong Kong. The firm has deployed Reuters' Triarch digital data distribution system to support approximately 100 users spread across two new trading floors. BZW's new rooms, located at Citibank Tower, are among the few new trading facilities that have gone live in the territory in recent memory.

Apart from Triarch, a key component of BZW's new trading systems landscape is Open Bloomberg, the version of the vendor's service that can be accessed on end-users' Microsoft Windows NT-based PCs or Sun Microsystems' Solaris-based Unix workstations. In BZW's case, access to Open Bloomberg, as well as to Triarch-delivered services, will be via NT PCs.

ANZ Securities decommissioned its last remaining Novell Netware file server a few weeks ago and has retired hundreds of X-terminals and 286-based PCs in a sweeping overhaul of its information systems hardware. Part of a two-year overhaul, the bank has replaced this ageing technology with a TCP/IP network linking Pentium PCs running Microsoft's Windows NT operating system.

Real-time news and market data is accessible from virtually any of the firm's more than 600 desktop PCs in Australia via a homegrown digital delivery system. Said system runs on Unix servers and is built around an Oracle database that stores data supplied by Australian Stock Exchange and other securities exchanges. In some cases, the in-house system is supplemented by AAP's AMQ, Knight-Ridder Financial's Equinet or Reuters' subsidiary Infocast's Beacon data services.

Citicorp is poised to announce that it has selected Reuters' Triarch as the digital data distribution platform it will install in a planned new 96-seat trading room in Singapore. To win Citi's business, Reuters fended off competition from Telerate, whose Telerate Trading Room System (TTRS) Citi uses to support a contingent of approximately 20 end-users in Singapore. Also, by the end of the year, Citi plans to outfit trading positions on the new Singapore floor with Microsoft Windows NT-based PCs.

The decision in favour of Triarch reflects a growing move within the bank to establish a common data delivery platform across different centres--and to make Reuters' Triarch that common platform, bank sources say. Apart from its limited use of TTRS, Citi Singapore trading and sales staff rely on a variety of information services delivered either via a Reuters' Prism video switch or on a standalone basis.

ING Baring Securities has consolidated its Hong Kong trading operations in a new 130-position room that features Windows NT and Reuters Triarch. Barings has also made a major commitment to Reuters' 3000 series, signing on to distribute the recently-introduced information services to 91 users in the territory, including traders, salespeople and research staff down to the junior analyst level.

Last week, Baring initiated its use of 3000 series information by cutting over an initial contingent of 15 end-users. The firm expects to have completed its rollout before the end of the year. The signing of such a large order from the likes of Barings is a coup for Reuters, coming as it does within weeks of the August launch of Securities 3000 in Hong Kong. To handle the data traffic generated by the expanded operation, Barings has also built a new computer centre at its Exchange Square site in Hong Kong.

After briefly evaluating Reuters' new 3000 series services, Standard Chartered Securities has proceeded instead to deploy Bridge Equity Workstations at its brokerage offices world-wide. The 50 or so Bridge terminals will replace Reuter Terminals as the firm's main source of market information at major centres world-wide. The Bridge rollout coincides with the firm's migration to Windows NT and TCP/IP systems.

At those StanChart Securities locations where Bridge does not have a presence--Bangkok, Jakarta, Kuala Lumpur and Manila, the firm will continue to rely on Reuter Terminals for real-time news and data. StanChart Securities has already gone live with Bridge in its new Hong Kong office, situated in the Bank of China Tower. The firm also plans to install Bridge in its London, New York and Singapore offices.

Societe Generale is finalising plans to build a new 200-position trading facility in Tokyo that will unite its banking, securities and futures broking subsidiaries in a single building. SocGen's new trading facility will rely heavily on Reuters' Triarch data delivery platform, as well as internally developed application software. For market data and news, SocGen plans to deploy Reuters' 3000 series of information services across all dealing desks in the new trading room.

Microsoft's Windows NT operating system also features prominently in the group's new systems blueprint. SocGen plans to embrace NT to replace Windows 3.1 on client-side desktop PCs globally, but the extent of NT's rollout on the dealing room server side has yet to be decided. At least for the time being, Unix-based systems will continue to be used for certain compute- and data-intensive processes, according to a SocGen source in Tokyo.

Banque Nationale de Paris (BNP) is formulating plans to relocate its trading room staff to a new and expanded 70-position room in Hong Kong's Central Tower. BNP's project team staff will replicate much of their current trading systems environment on the new floor, although some trader support systems are being re-developed, while others will be added to the bank's systems mix in advance of the move.

As is the case on its existing floors, BNP's new trading room systems will rely heavily on technology from IBM and Tibco. Back-end IBM RS/6000 servers running the AIX Unix variant will supply a predominantly homegrown set of trading and analytic applications to end-users. Front-office staffers will continue to use a mix of AIX-based workstations and Microsoft Windows-based PCs to access these.

BNP Hong Kong also recently signed an agreement with SunGard Futures Systems for its futures and options clearing software.

It may take incurable optimism and a powerful magnifying glass to locate the bright spots in the news about Telerate that emerged in Dow Jones' latest earnings release. Revenue growth at Dow Jones' information services segment--which accounts for nearly half of parent profits--was virtually flat at 0.6 per cent world-wide for the third quarter. Asia revenues fell for the second quarter in a row, according to analysts briefed by Dow Jones.

Whereas last quarter Asia's sales had tumbled five per cent, this quarter they were down just 0.5 per cent as compared to last year, analysts say. Dow Jones' officials said that consolidation in the banking industry was a major factor in the declining rate of revenue growth. However, they also conceded for the first time "that there were issues of competitive pressure and market share erosion," says Michael Ellman, an analyst at Schroder Wertheim.

Bankers Trust Fund Management Australia (BTFM) is in the midst of an organisation-wide IT project that will result in the introduction of a private TCP/IP-based intranet and the installation of Microsoft's Windows NT network operating system, along with Netscape's Navigator Web browser on end-user PCs. Once this infrastructure is in place, BTFM has further plans to deploy a number of Java-based financial systems and applications.

For one, the firm currently has a project under way to develop a GUI interface based on Sun Microsystems' Java programming language. End users will eventually be able to access the entire range of information and applications they require through this GUI, which will run on their PCs. As part of this effort, BTFM technology staffers are currently working to incorporate Java-based objects within the firm's core systems environment.

Logica, the UK-based systems integrator, is closing down its Singapore office and consolidating its regional operations in Kuala Lumpur, while de-emphasising its wholesale bank systems business across the region. Logica's Singapore-based wholesale banking clients will be supported from its existing office in the Malaysian capital, as well as from the vendor's Hong Kong office.

Peter van Es, managing director for Logica Asia/Pacific, says that Logica has decided to reduce the amount of staff and capital it allocates to its wholesale trading systems operations in Southeast Asia following management's reassessment of near-term business prospects in this market. Lengthening sales cycles, industry consolidation and reduced IT budgets all contributed to the decision, he says.

BT's Syntegra says its OTS digital data distribution platform has hit 1,000 licenses in Japan, representing a 10 per cent share of the Japanese trading room market. That growth comes thanks to a deal signed two years ago with Nomura Research Institute. NRI sells OTS in Japan primarily by offering the platform along with its own Pleiades suite of securities trading applications, as a package it calls Pleiades-DF (for datafeed).

Through NRI, OTS has been installed at 15 sites in Japan, as well as one each in Hong Kong and Singapore, according to a source. Thus far, the OTS-cum-Pleiades package has been sold mainly to Japanese securities firms, although three Japanese insurers and one bank's securities subsidiary have also bought the package. In addition, NRI has authorized Quick Corp. as a subdistributor to sell Pleiades-DF under the name of Quick Financial Platform.

US-based Sungard Financial Systems has acquired Sydney-based treasury management systems developer Dealing Information Systems (DIS). DIS, which has now been renamed Sungard Dealing Systems, plans to boost the organization's presence within Asia/Pacific and beyond. DIS's flagship Matrix multi-currency middle- and back-office trade-capture and treasury management system is currently installed at over 30 sites in the Asia/Pacific region.

Co-founders Wendy Penn, Brandon Penn and Anne Lenz formed DIS back in 1986, initially working out of the Penns' home in Sydney. During the past fiscal year, DIS generated between A$8 million and A$9 million ($6.4 to $7.2 million) in revenues, according to DIS officials. They decline to disclose the sale price for the company. DIS' founding trio will continue to manage the company.

Hongkong Bank IT staff have nearly completed rolling out a new version of the Treats treasury management system across its 12 treasury centres in Asia/Pacific. Other HSBC Holdings' bank trading rooms within and outside the region now use Treats, including HSBC Midland's recently-expanded 60-position dealing room in Tokyo.

Meanwhile, Hongkong Bank's treasury group is piloting an internally-developed real-time risk management system at its Hong Kong headquarters. This Unix-based system uses Sybase's database as a data repository and relies on Tibco's TIB digital data distribution platform to give end-users access to real-time risk data.

Standard Chartered Bank is in the midst of an ambitious drive to expand its trading centres and standardise its systems infrastructure across southeast Asia. Last week, the bank's IT staff brought a new 24-position trading room in Manila on-line. A week earlier, front-office staff in Bangkok moved into a new 32-position room. Standard Chartered also plans to expand its Singapore trading centre, expecting to christen a new 100-position room in the city-state during 1997's second quarter.

The bank's IT staff brought the new, 24-position Manila trading room live on November 11. Manila is the ninth StanChart trading room in which bank IT staff have deployed Reuters PTW 4.0 display software since it first began rolling it out in July 1993.

Commonwealth Bank of Australia has made Dow Jones Telerate its main source of news and market data worldwide, significantly reducing its reliance on Reuters' information services. The replacement of Reuters' data with Telerate's is part of an ongoing world-wide review and rationalization of the bank's information services designed to generate cost savings and IT efficiencies.

Since the October 1 expira