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August 31, 1999

Software Company NabsThird Market Biggies

By Peter Chapman

Afledgling securities industry software and consulting company is co-developing trading room systems for two of the most mature firms in the third market.

Jefferies & Co. is building an order management and routing system, while Bernard L. Madoff Investment Securities is creating an automatic execution system with Avtec Systems, a Jericho, New York-based company founded in 1997.

Avtec signed the deals just as many trading firms are scrambling to keep pace with breathtaking technological and regulatory changes.

Madoff, once considered one of the most innovative firms in the retail third market, is operating a platform that could soon become obsolete.

"We are developing our next generation trading system [with Avtec] to enable us to readily adapt to industry changes and the unprecedented levels of volume and price movements," said Peter Madoff, a principal at Madoff. The changes include the coming industry switch to decimal-based trading.

Mike Alex, head of trading technology at Jefferies, said his firm has similar concerns about the future. For instance, the new order management system the firm is co-developing with Avtec will help Jefferies intensify its ability to capture trade data for the National Association of Securities Dealers. The system will also enable it to cope more effectively with shorter settlement cycles.

One of the more immediate concerns for Jefferies is the fragmentation of price-quote information and trading in disparate systems. The new system "will give customers a single interface to various sources of liquidity," Alex said.

Avtec said the two deals are unprecedented for the company. But they are not the first deals of their kind for the four partners who founded Avtec. Bijan Monassebian, Martin Hakker, Jeff Monassebian and Martin Hakker, Jr. have been building and selling computer trading systems to Wall Street for 20 years. In 1979 they started TCAM Systems and sold it in 1994 to Stratus Computers. About three years ago, they became founders of Avtec.