Smith Barney Tees Up Vendors For 100-Position Upgrade

Smith Barney, Harris Upham & Co.'s 100-plus-position corporate finance group in New York has asked three vendors -- FD Consulting Inc., Teknekron Software Systems Inc. and Automatic Data Processing Inc. -- to build prototypes of PC- based trading-room systems for the group to evaluate. The pilot is the first fruit of Smith Barney's plan to upgrade the data distribution systems it uses firmwide.

Smith Barney employs about 400 traders in the U.S. According to a senior systems official at the firm, who spoke on condition of anonymity, fixed-income traders will be the next in line to set their data distribution system evaluations in motion.

Though the evaluations will take place on a trading-group- by-trading-group basis, Smith Barney is conducting them with a view toward establishing a unified platform strategy (TST, July 13). As a result, the firm will probably select a standard trader workstation/data distribution system platform, even while fully expecting some desks to decline to use certain of its components.

The corporate financing group is a case in point: Because it's main business is structuring deals -- rather than trading per se -- it requires less-powerful workstations and fewer sources of real-time market data than do many other groups at the firm.

Though Smith Barney originally anticipated that evaluations would take most of 1993 to complete, the official says it now expects them to take even longer.

The official says that Smith Barney has opted to pursue a buy-rather-than-build strategy in its quest for data distribution systems.

To date, with a few exceptions, the firm's traders have relied primarily on Reuters/Rich Inc. video-switching technology to distribute market data. This technology will be largely, if not entirely, replaced by the firm's proposed digital platforms.

Of the firm's 400 U.S. traders, some 300 are located in New York, on two separate floors at the firm's headquarters at 1345 Avenue of the Americas. On one floor, bond traders share space with commodity traders, while equity traders occupy another floor.

The firm has retained Andersen Consulting Inc. to assist it in its survey of market data distribution platforms, end- user analytics and data feeds. In the first phase of the project, Smith Barney and Andersen have been evaluating the information systems needs of the firm's various business units and trading desks. Among other things, they are examining where economies of scale might be found and what existing systems might be retained.

It could not be determined at press time why incumbent Reuters is not on the corporate financing group's shortlist. If this group's choice of vendors is any indication, Reuters could face difficult days in the race to provide services to the bulk of the firm's traders.

Reuters' absence from the list is especially intriguing given the corporate financing group's quest for a PC-based system. Reuters' Personal Trader Workstation user interface to its Triarch 2000 data distribution system has been available for some time and is being aggressively marketed by the vendor.

While both FD and Teknekron have said they are at work developing PC-based trader workstation software (TST, Nov. 2), neither has yet released a production-ready version of such a system. Sources at Chemical Bank say the bank is currently testing a pilot model of Teknekron's PC product (see Core Dump).

As for ADP, although it doesn't typically compete head-to- head with FD and Teknekron, the Smith Barney official notes that ADP's imminent incumbency on Smith Barney's retail brokers' desks makes it a logical candidate. ADP signed an agreement late last year with Smith Barney to supply a highly customized market data platform in support of the firm's 4,200 brokers (Inside Market Data, Dec. 9, 1991).

According to the Smith Barney official, earlier this summer the firm was seriously considering IBM RS/6000s for its global trading platform. However, he says, Sun Microsystems Inc. SPARCstations now look to be the stronger candidates. The official says Sun began to shine as the firm compiled its list of desired applications: it found that far more ran on the SPARCstation than on the RS/6000.

The RS/6000 was given early consideration by the firm in part because of Smith Barney's prior experience with IBM systems and in part because the firm's retail brokers will use RS/6000s as servers -- thus making bulk discounts on the boxes a distinct possibility.

IBM supplies the mainframes that have for some time played host to Smith Barney's proprietary database and back-office transaction processing systems. At the same time, many of the digital data distribution systems sprinkled in pockets throughout the firm also rely on IBM hardware.

Specifically, the firm's mortgage-backed securities traders use an internally developed system that runs on RS/6000 servers and IBM PC clients. This system makes use of a relational database management system from Sybase Inc.

And the firm's 40-odd over-the-counter equities traders access data and applications from IBM PC-AT microcomputers linked by local area network to a fault-tolerant Tandem Computers Inc. processor. The Tandem runs pricing, execution and trade-reporting applications from Network Concepts Inc.