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December 8, 2008

Have Black Box Will Travel

By James Ramage

The high-velocity trading business is expanding into Europe and Asia. And four brokerages are betting on FTEN's technology to help accelerate the process.

Credit Suisse, Goldman Sachs, JPMorgan and Merrill Lynch have bought an undisclosed minority stake in the New York-based application technology vendor for high-frequency trading firms.

For the brokerages, the investment gives them a stake in the global expansion of the high-speed, high-volume processing infrastructure for their black box trading clients. As the high-velocity trading business moves overseas, the brokerages are keen on offering those services to their high-velocity trading clients.

"From a strategic sense, they wanted us to accelerate our expansion into Europe and Asia for not only the increasing demand from their clients, but also to meet the market demands," said FTEN president Ted Myerson.

The deal lets FTEN-which says it processes more than 20 percent of the U.S. equities daily volume-speed up its expansion as the firm invests in its global infrastructure, high-speed network and its personnel, Myerson added. FTEN recently launched its European business and is now building out its infrastructure in Asia.

"The demand is only increasing," he said. "It's a wonderful opportunity now. And we see more and more firms reaching out into these new regions as the BATSs and the Chi-Xs gain ground across Europe."

FTEN would not disclose the amount the four brokerage firms invested in the deal, nor would it reveal their level of ownership. None of the firms got board seats.

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