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December 6, 2006

Citi's Richardson to Head Boston Equities Exchange

By Nina Mehta

Citigroup's go-to man on market structure, C. Thomas Richardson, is now overseeing a market of his own.

This month Richardson becomes president of the new Boston Equities Exchange (BeX), an electronic trading market that's a joint venture between the Boston Stock Exchange and five securities firms, including Citigroup.

Richardson was a managing director in U.S. equities at Citi, his employer since 1994. Most recently he was responsible for thinking strategically about the changing electronic markets, investing in businesses and building out the broker-dealer's trading platform.

After being approached to head several consortiums, the Citi exec finally found he couldn't say no. Boston proved to be "a unique opportunity to build on my experience at Citi and run a state-of-the-art trading system," Richardson says. What was so compelling? "The management team in Boston is very cohesive and creative," he says.

The BSE is the holding company for BeX, the SRO's single-stock trading platform, which begins trading this month. The Boston exchange is also a co-owner of the Boston Options Exchange and has a contractual technology relationship with (but no ownership stake in) Level ATS, a new consortium-owned dark book-matching engine.

Broker-dealers will be able to send flow from BeX to Level ATS and vice versa, or ping both venues separately. Richardson notes that with all the market structure changes taking place, exchanges in the future are likely to need dark pools or crossing mechanisms in addition to electronic displayed markets.

The challenge Richardson faces in his new venture is grabbing a piece of the equities market share. "Right now Boston has a small amount of market share," he says. "My challenge is to increase that share."

Richardson speculates that firms may put their "bright liquidity" in BeX and their dark liquidity in Level. BeX will be fast, very low-cost and like an ECN, he says.

Richardson adds that the equities industry is highly competitive-but in his view, BeX has what it takes to garner enough market share to succeed.

The BSE owns more than 50 percent of BeX. The five brokers in the joint venture, which have equal equity stakes in the exchange, include Citigroup, Credit Suisse, Lehman Brothers, Fidelity Brokerage Company and Merrill Lynch.