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Solving the Last Mile Problem in Investment Research

One executive takes a forward look at how will the research value proposition change over the short to medium term, and what are the products and strategies managers will turn to?

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January 1, 2001

Nasdaq's Domestic Tech Troubleshooter

By Peter Chapman

Steve Randich became Nasdaq's chief technology officer (CTO) last October, replacing John Hickey who was moved into an "advisory" role. Randich, the former chief information officer (CIO) of the Chicago Stock Exchange, is responsible for systems development and operations at Nasdaq. He reports to CIO Gregor Bailar.

As CTO, Randich focuses on domestic technology while Bailar handles international technology. Systems development entails building new systems, such as SuperSOES, SuperMontage, while maintaining existing systems. Traders Magazine spoke to Randich about his goals.

Traders: What are your priorities at Nasdaq?

Randich: The same as they were at the Chicago Stock Exchange: operational integrity and time-to-market for new products. By operational integrity I mean systems uptime. Capacity is a key factor here. New products are SuperSOES, SuperMontage, decimal-trading and so forth.

Traders: Market makers have complained about capacity problems for two years now. What are you doing about it?

Randich: First of all, it's important to recognize that six of our highest volume days have happened in the last six to eight weeks. Message volume - which includes quotes -continues to rise. We hit new records almost on a weekly basis. So we must make sure that SelectNet can continue to handle the traffic through the industry's switch to decimal-trading and up to SuperMontage. That requires continuous capacity enhancement. Dozens of projects. But the focus is on the quotation system and SelectNet.

Traders: Can you be more specific?

Randich: One plan involves splitting up SOES and SelectNet to run across multiple computers in the Tandem environment. We just completed a project called "multi-SOES" where we divided SOES into four parts. We split the alphabet four ways-one part handles all stock symbols beginning with the letters A-C and so on. It's a very common way of scaling systems in the securities industry. That's one of many examples.

Traders: Will you do this with SelectNet?

Randich: We believe so, yes.

Traders: You mentioned decimals. What is your plan for meeting the Securities and Exchange Commission's mandate?

Randich: We're in the final testing stage and plan to include member firms in the second half of December. Then we have two industry tests scheduled: one for the end of January and one for the beginning of February. There's interest from the Street about adding a third date.

Traders: Will you run a pilot as did the New York Stock Exchange?

Randich: The SEC has mandated that we begin trading on a pilot basis on March 12 with a phase-in process that completes in full by April 9. We're working with the industry to determine exactly how that will happen. We haven't decided in how many stages to do that nor the number of stocks we will include in the pilot.

Traders: We understand SuperMontage has yet to be designed.

Randich: Actually, we just completed a high-level design that specifies exactly how we're going to implement it. But there is further design work that needs to be done.

Traders: When will the programming start?

Randich: In some areas it already has.

Traders: Your target for completion is the end of [this] year?

Randich: That's correct

Traders: Will you need to make organizational changes to achieve all of your goals?

Randich: At this point, there is nothing substantial planned. The existing organization is not an impediment to achieving those goals. That said, we will be making many other smaller changes to get closer to our customers, the member firms. We also plan to realign the technology side of Nasdaq with the business side. We want to make sure the two operate in lockstep.

Traders: That means better communication?

Randich: Yes, and having better representation of the business within the technology community and vice versa.

Traders: Thank you.