Electronic Trading Raises VAR Prospects

As securities and commodities trading becomes increasingly electronic, service providers may find it to be an increasing source of business.

The ascendancy of electronic trading came to the fore April 20 when the New York Stock Exchange disclosed a plan to merge with Archipelago, an electronic trading company. Two days later, Nasdaq Stock Market Inc. announced plans to acquire Instinet Group Inc., another electronic trading vendor. While such heavyweights have the means to build or buy electronic trading infrastructure, smaller organizations don’t. Many of those firms will look for outside help.

That’s the analysis of Dan Walker, a director in the Chicago region of Equinix Inc., a data center and Internet exchange services provider. “NYSE has plenty of capital … but the vast majority of the market is going to outsourcing that component,” he explained. “Everybody is trying to convert systems and thinking to the electronic mentality.”

As a consequence, Walker reported a surge in demand from financial customers.

This surge started about 18 months ago when European exchanges began lining up. Euronext.liffe selected Equinix to deliver the international foreign futures exchange’s electronic trading service. The Deutsche Börse Group’s Eurex division also came on board.

Equinix offers such companies access to an “enterprise-hardened” data center and access to multiple locations around the world, Walker said. Equinix’s ISP relationships let an exchange tap a Japanese or German ISP, if a trade needs to connect to an exchange in those countries.

“We have all of the international ISPs on the floor,” Walker said. “These are things [companies] can’t get easily on their own” and would prove cost prohibitive to build.

The exchanges—and other customers such as brokerage houses and independent brokers—take advantage of technology such as metropolitan-area Ethernet networks that were originally intended for dot-coms. The financial firms are just now picking up the technology.

“Up until this point, companies had been using proven, old-school technology on the network side—point-to-point circuits, frame-relay and ISDN.

Equinix isn’t the only company eyeing the exchanges and electronic trading. Silver Lake Partners last week led a group of investors in the pending purchase of Instinet, the electronic trading arm of The Nasdaq Stock Market Inc.

IBM and Accenture pursue health care deals.

IBM, Accenture Pursue Health Care Deals

IBM on Tuesday disclosed plans to acquire Healthlink Inc., a Houston-based health care IT consulting firm.

The deal is expected to close in the second quarter. Terms were not disclosed.

IBM stands to pick up more than 625 employees in the transaction. Healthlink’s customers include Evanston Northwestern Healthcare, Boston Medical Center and the University of Utah.

IBM’s deal follows Accenture Inc.’s decision to acquire Capgemini’s North American health practice. In that deal, Accenture will pay $175 million to purchase Capgemini U.S. LLC’s and Capgemini Canada Inc.’s North American health care operations.

About 600 Capgemini staffers are expected to join Accenture following the acquisition. The deal is expected to close in the next 60 to 90 days.

Large U.S. health care organizations spent an estimated $27 billion on IT services and equipment in 2004, according to market researcher In-Stat. The company defines large organizations as those with more than 1,000 employees. Smaller health care organizations spent $21 billion on IT services and equipment, In-Stat reported.

Manhattan Associates Sees License Uptick

Supply chain specialist Manhattan Associates Inc. on Tuesday reported a 12 percent boost in software and hosting fees for its first quarter compared with the year-earlier period.

The company’s Integrated Logistics Solutions line includes order management and warehouse management among other modules. The company experienced “strong license sales in the U.S. and Asia/Pacific,” said Pete Sinisgalli, president and chief executive officer of Manhattan Associates.

License sales were weak in Europe, however. Sinisgalli cited a sluggish capital investment environment.

Manhattan Associates revenue for the quarter was $56.3 million, a 10 percent increase compared with the first quarter of 2004. Adjusted net income for the first quarter was $6.2 million, or $0.20 per diluted share.

The company reported closing four deals in the first quarter of $1 million or more in licensing value. New customer wins included Ballantine Produce Co. Inc., BDI Laguna Inc., DealEasy Information Technology, Innovative Logistics, ManTech Security Technologies, Mayo Foundation, Perfect 10 Satellite Distribution, Roadshow Entertainment, S. Abraham & Sons Inc. and TS Freight.

BlueRoads Adds WebEx Feature

BlueRoads Corp. on Monday launched an interface that will link the company’s channel management software with WebEx Communications Inc.’s Web meeting application.

The interface will link the BlueRoads 5 Suite with WebEx meeting center and is slated for availability during the second quarter of 2005. BlueRoads 5 distributes and tracks leads among other channel services.

Product vendors can use the interface to extend WebEx services to those channel partners lacking a subscription. The linkage will improve coordination between vendors and channel partners, according to BlueRoads. The company’s customers include Hitachi Data Systems, Nortel Networks, Sun Microsystems and SurfControl.