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March 1, 2001

Technologist For Third Market

By Peter Chapman

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  • Technologist For Third Market

Mike Alex is senior vice president for e- business at third market block trading house Jefferies & Company. He spends half his time evaluating new technology and the other half working with the firm's investment bankers to identify promising technology vendors. The position was officially created last summer, although Alex says he has been doing the work since he rejoined Jefferies in 1996.

Alex first joined Jefferies in 1987 to launch the POSIT crossing system and the ITG group. He left for five years in 1991. He then worked with well-known technologist Bill Lupien on the development of the OptiMark trading system. Upon his return in 1996 he created and ran Jefferies' program trading desk. He also developed its Account Executive workstation, the foundation of Jefferies trading network. Alex reports to John Shaw, Jefferies president and chief operating officer.

Traders: Why did Jefferies create this position?

Alex: Because of the technological demands of the brokerage industry.

Traders: Wasn't it a big leap for you to go from the program trading desk to heading up e-business for the firm.

Alex: Not really. I was already spending a lot of time off the desk working on other technology projects. When I came back to Jefferies in 1996 part of my time was spent advising the equity department on technology. My entire career has been spent as a trader, but it has also involved working on technological trading systems. Building them. Designing them.

Traders: And basket trading requires the use of technology anyway.

Alex: Exactly.

Traders: You're not a trader and you're not an IT person. You seem to be a bridge between both worlds.

Alex: Absolutely. I work hand-in-hand with [Jefferies'] CIO Jim Nikolai to review all of the firm's technology initiatives. But Jim looks at things from the technology point of view while I look at them from the business point of view. As an example, when we were considering customer relationship management software, Jim's concerns were whether the database structure was compatible with our internal systems. My concern was whether it solved the business problem.

Traders: Any other projects?

Alex: We recently installed a new order management system. Jim and I evaluated more than 10 different vendors, but finally came to the conclusion that we had to build it ourselves. I designed the screens and tried to make it as trader-friendly as possible. So, in a case like that, I'll get involved with screen layout and spell out the required functionality.

Traders: Why did you decide to build the OMS yourself?

Alex: Half of our executions are still third market crosses. The vendors had a problem designing a solution for that.

Traders: Because there isn't so much demand for that functionality?

Alex: Exactly. With most OMSs, the orders are entered electronically by customers or manually by brokers. They are then routed to a trading desk and down to the floor for execution. Most OMSs can deal with that. But vendors are unaccustomed to a broker having both sides of the trade and crossing them.

Traders: What about BRASS?

Alex: We use BRASS, but we had to work with [SunGard] to build the crossing screens.

Traders: How is the OMS used now?