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July 27, 2005

Industry Braces for Consultant Onslaught

By Peter Chapman

(Traders Magazine, July 2005) -- In an eight-day period from late May to early June, consultants to the trading industry released no fewer than three reports. The windfall highlights the increasing complexity of stock trading and the growing number of consultants eager to advise on the industry's changes.

"There's a lot of confusion in the market," says Josh Galper, an analyst with Tabb Group, one of the three firms to release reports. "It's a time of transition. Some firms are meeting the challenge. Others are not. Firms like ours are needed to help those that aren't," he added.

Tabb is part of a surge of firms or analysts to jump into the trading space in the past year or so. Other newbies are Aite's Sang Lee, Financial Insights' Randy Grossman, BusinessEdge Solutions' Ed Brandman and Efficient Frontier's Holly Stark.

These players join such old hands as Tower Group, Greenwich Associates, McLagan Partners, Boston Consulting, Cutter Associates, Accenture, Capital Markets Company, and Celent.

Tabb's survey, released on May 26th, covered institutional trading with a focus on the buyside. A day earlier, Celent released a study of execution quality comparing market centers and market makers. On June 1, Financial Insights, a unit of IDC, released a survey on algorithmic trading.

"The environment is changing so rapidly," says Holly Stark, a former buyside trader. "The way you do business today is very different from three years ago, or even a year ago, Stark said. "It's much more complex."