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February 18, 2010

Sponsored Access Concerns Benefit Bon Trade

By Peter Chapman

A New Jersey-based vendor is taking advantage of proposed new regulations aimed at reining in the sponsored access business. Bon Trade Solutions is marketing its risk management and connectivity services under the banner Market Centurion.

The service allows broker-dealers to offer sponsored access services to their customers while keeping within the guidelines of new rules proposed by the Securities and Exchange Commission. The regulator has been looking to rein in so-called naked sponsored access for about a year, and introduced new regulations in January. The rules would prevent brokers from allowing their customers to access market centers using their MPIDs without pre-trade risk checks. The fear is customers could harm the marketplace, either intentionally or unintentionally.

Bon Trade, which has offered front-end systems and market connectivity for several years, has always provided its customers pre-trade order checking. "It was always an operating necessity," John Paul DeVito, Bon Trade's director of sales, said. "Now it's a regulatory mandate." Customers can take from Market Centurion what they want. They can deploy the full-blown package of risk controls and connectivity, co-locating trading servers near to exchanges. Or they can simply deploy the risk management software on their own systems and provide for their own connectivity. There is interest in both, according to Victor Tartaglia, a Bon Trade managing director.




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