Commentary

Derek Edward Schloss
Traders Magazine Online News

What the !@#$ is a Security Token?

In this first part of a series, Mr. Schloss will begin to explain what a security token is by explaining how the building blocks of securities law are fundamental to understanding the tremendous value security tokens will one day unlock.

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July 31, 2004

From Citi to Polishing BRASS

By Peter Chapman

Leman: I don't know if we are going to build. We may enter into a key relationship with someone to help us put ourselves on the map. I had a significant initial role in the design and building of the Citigroup program trading system. We need within BRASS to offer a program trading solution. We need to align with someone who can work with us as a partner. It's quite expensive to build from scratch.

Traders: What is the specific goal?

Leman: We are going to work with somebody to put a system at the disposal of a broker. And offer it so we can white label it. Or, we can white label a multi-broker approach that firms can deploy to their institutional customers. Building it is not necessarily the only way to get in the game.

Traders: How about crossing?

Leman: Crossing is going to be examined more and more by brokers. We need to look at how we can help them manage their order flow more effectively, control their costs and provide their customers with better executions. A lot of the crossing issues relate to the characterization of order flow. For instance, how can brokers synergize.

Traders: Both broker and customer benefit?

Leman: Where there is a spread between the bid and offer and it is worth doing price improvement, both parties get a benefit from it. If there is money to be saved by crossing, brokers will pursue it. They will pursue it in a way that takes in all of the order flow streams: retail, institutional, DMA, proprietary. Even algorithmic trading. Anything that moves and trades is going to be evaluated. Exactly what it will look like and how many people can adopt it I don't know. And even the ability to let two different firms find a way to reach one another electronically prior to going to ECNs, might be something that needs to be explored.

Traders: Are you building any engines now?

Leman: I've only been here 90 days!

Traders: Fair enough. Thanks, Jim.