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December 1, 1998

OptiMark Names Chief Executive Before Launch: Hires Phillip J. Riese as Controversies Continue

By Michael L. O'Reilly

With the deadline for its scheduled January launch looming, OptiMark Technologies named Phillip J. Riese chief executive, a post previously held by company co-founder and chairman William Lupien.

Before joining OptiMark, Riese was an 18-year employee of American Express, serving most recently as president of American Express U.S. Card Group.

Lupien will continue in his responsibilities as OptiMark chairman.

Riese's hiring was announced by Lupien at a luncheon at New York's Rainbow Room in November. Lupien described the executive hiring as a measure to better serve clients of its order-matching system.

"I did not want to be an entrepreneur that stayed in charge too long," Lupien said at the luncheon. "We needed to hire a skilled executive with a background in client service. Phillip was our clear-cut choice."

Riese joins the Durango, Colo.-based company at a critical juncture. The OptiMark Trading System is scheduled to go live as a facility of the Pacific Exchange (PCX) next month.

The company is awaiting a decision by the Securities and Exchange Commission regarding its proposed link to the Intermarket Trading System (ITS).

Despite rumors that OptiMark would once again delay its launch which is roughly set for mid-January a company official maintained the system is on target to begin trading next month.

OptiMark began alpha testing its systems with the PCX in November, which was expected to last five weeks. Once alpha testing is completed, the system will be linked to PCX systems for beta testing, which is expected to run into January.

OptiMark's first real trade will take place after completion of beta testing.


Meanwhile, both OptiMark and the PCX are awaiting a decision by the Chicago Board Options Exchange (CBOE) which acquired the PCX earlier this year about the San Francisco-based exchange's future. The CBOE is attempting to sell the PCX's equity business, but is prepared to integrate equities into its new structure should no suitable buyer be found.

Lupien said that a potential sale of the PCX would have no effect on the future of OptiMark, which is contractually considered a part of PCX operations.

OptiMark and the PCX are also awaiting an SEC ruling on OptiMark's proposed link to the ITS. John Katovich, OptiMark's general counsel, said the company expects a ruling before the completion of beta testing in January.


OptiMark has been involved in a public struggle with the New York Stock Exchange over the ITS link.

The Big Board has opposed the link to the ITS, claiming OptiMark will use it to access orders on the floor of the NYSE.

The NYSE has repeatedly lobbied to have the proposal denied, most recently in a 17-page letter to the SEC countering OptiMark's arguments supporting its proposal.

For its part, OptiMark has refrained from replying to the Big Board's most recent letter.

"We won't reply to the latest NYSE statement," Katovich said. "It's not productive to comment on things that we don't think have substance. We are just going to wait and see how the SEC responds to our proposal."