The Online Finance 30: Exchanges and Technology Providers

Böcker of OMX Leads Exchange Field; Caplin Excels in Software

Magnus Böcker

CEO, OMX

Last year's rank: 12

Magnus Böcker was OM Group's technology chief, reporting to CEO Per Larsson in 2000, when the Stockholm-based regional exchange operator was attempting to outmaneuver Deutsche Börse in a takeover battle for the London Stock Exchange that both suitors ended up losing. After an ensuing power struggle, Larsson resigned in 2003, and Böcker took the top job at the renamed OMX. Amid the competition and consolidation, which have continued to intensify, Böcker's OMX became a prime acquisition target this year with none other than Larsson, now CEO of Borse Dubai, bidding for control against Nasdaq Stock Market, which was itself spurned by the LSE this year. All was resolved, in principle, last month when Nasdaq agreed to sell Borse Dubai a 19.99 percent stake and swap its 28 percent holding in the LSE for Dubai's interest in OMX. The deal should culminate in a merger of Nasdaq and OMX that values the Scandinavian outfit at $4.9 billion. The complex tie-up seems sweet vindication for Böcker. He had pursued Larsson's original strategy by steering OMX to Nordic and Baltic dominance as owner of the exchanges of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania and Sweden. And some 60 exchanges in more than 50 countries are users of OMX technology, which Nasdaq CEO Robert Greifeld sees as crucial to creating "the largest global network of exchanges and exchange customers linked by technology." Böcker, 45, has an equally impressive financial track record. OMX operating income increased 33 percent in 2006 from a year earlier, to 1.21 billion Swedish kronor ($177 million). The average number of trades per day rose 47 percent, to 124,484, and IPOs leaped to 103 from 41. "We will continue to build on the successful strategy that we put in place a few years ago," Böcker says, "and we should see growing use of our technology." He bolstered that tech base by acquiring the markets technology business of Australia's Computershare in 2006 for Skr250 million and Swedish financial data provider Findata in March 2007 for Skr78.5 million, including potential earn-outs.

Arman Falsafi

Managing Director for Europe and Asia, Chicago Mercantile Exchange

Last year's rank: 13

In 2006, another record year for the Chicago Mercantile Exchange, the world's largest marketplace for futures and options on futures, average daily volume surged 28 percent, to 5.3 million contracts. Of that total, 71 percent traded on the Globex electronic platform. That was before the July 12 completion of the CME's $11.9 billion merger with the Chicago Board of Trade. In August their combined average daily volume was 14.9 million contracts, 78 percent higher than a year earlier, and 77 percent traded electronically. International managing director Arman Falsafi isn't content to stop there, though. A record 10 percent of Eurodollar options contracts were screen-traded in August, but that left nearly 2 million more contracts per day to be converted. "We're spending a lot of time and money to have an open, transparent central marketplace for this stuff, rather than letting it go upstairs," says Falsafi, 40, who has been leading the CME's global march since relocating to London in July 2004 after three years heading global electronic trading and data in Chicago. Recent initiatives have included a partnership with the New York Mercantile Exchange for trading energy and metals contracts on Globex; the launching of FXMarketSpace, a foreign exchange market joint venture with Reuters Group; and the $15 million acquisition of London-based interest rate swaps platform Swapstream. "We're not trying to pick and choose winners; we're just feeding an enormous appetite," she says.

Jean-François Théodore

Deputy CEO, NYSE Euronext

Last year's rank: 2

Jean-François Théodore forged the multinational Euronext exchange by combining the principal securities markets of Amsterdam, Brussels, Lisbon and Paris and the London Interbank Financial Futures and Options Exchange in the early part of this decade. Then he reached across the Atlantic to consummate the landmark E10.3 billion ($13.7 billion) NYSE Group-Euronext merger on April 4, preserving Euronext as a separately regulated European marketplace that might have lost its autonomy had it accepted a competing offer from Germany's Deutsche Börse. Théodore, 60, also maintained his position as chief executive and chairman of Euronext's managing board while ranking as deputy CEO to John Thain at headquarters in New York. NYSE Euronext is aiming for E275 million in annual synergy benefits by 2010, more than 90 percent of that resulting from harmonized electronic platforms. "We won't have a single platform for the NYSE and Euronext because of the different regulatory environments, but we will have the same basic system, the same IT provider and fewer computer centers," says Théodore. That lowers "a barrier to common trading," he says, "and should boost liquidity, with more Europeans trading on the NYSE and more Americans trading on Euronext." Looking longer term, Théodore wants Euronext to be the focal point of further consolidation in Europe. "We have kept our structure through the recent merger so that other European exchanges will find it attractive to join our organization," he says.

Reto Francioni

CEO, Deutsche Börse

Last year's rank: 3

The architect of a resurgent SWX Swiss Exchange earlier this decade, Reto Francioni moved into the hot seat two years ago when he was named CEO of Deutsche Börse, facing activist shareholders who had ousted the previous management to protest its bid for the London Stock Exchange. A lagging stock, which was trading at 22.6 times estimated 2007 earnings last month compared with the LSE's 25.7, NYSE Euronext's 29.0 and CME Group's 37.2, has done little to soothe investor anger. Facing vocal hedge fund critics Atticus Capital of New York and London's the Children's Investment Fund, the 52-year-old Francioni changed the subject on April 30, announcing an agreement to acquire New York­based electronic options and stock exchange operator International Securities Exchange for $2.8 billion. Pending completion this quarter, ISE will combine with Deutsche Börse­controlled Eurex as a derivatives-market counterpunch to July's CME­Chicago Board of Trade merger (see Arman Falsafi, No. 2). The company's Frankfurt Stock Exchange, Eurex Clearing and Clearstream units have all announced technology, efficiency and price-reduction initiatives in recent months. Last month Deutsche Börse unveiled a plan to reduce annual expenses by
E100 million ($140 million) within three years and to buy back 10 percent of its shares to address valuation concerns. Still, some analysts believe Deutsche Börse would be worth more if it were to divest Clearstream and its Xetra stock trading platform and merge Eurex with the CME or another rival. Eurex has been thriving, with volatility driving its August average daily contract volume to 7.6 million, a year-over-year gain of 3 million. "We believe that the sum of Deutsche Börse is worth more than the parts," says Francioni.

Peter Gomez

Chairman, SWX Group

New to list

If SWX Group in Zurich had a bigger footprint, then Reto Francioni (No. 6) might have been content to stay on as group chairman and CEO rather than move to the top job at Deutsche Börse in September 2005. SWX, though a pioneer in derivatives trading and technology, was -- and is -- only a minority partner in Deutsche Börse's Eurex derivatives exchange. The Swiss exchange's London-based virt-x cross-border electronic exchange and the Scoach structured products market, also a joint venture with Deutsche Börse, are innovative, but only niche markets. Under Peter Gomez, SWX is focusing on its home market in a bid to shore up its position. A business professor who since 2005 has been dean of the Executive School of Management Technology and Law at the University of St. Gallen, the 60-year-old Gomez became SWX's chairman in May 2006. A year later he concluded negotiations to merge SWX with the Swiss clearing organization SIS Group and financial information giant Telekurs Group, signing a 20-year agreement among the Swiss banks that own the entity to keep potential predators at bay. When this "integrated infrastructure that spans the entire value chain," as Gomez calls it, officially opens its doors in January, it will create new "possibilities for international collaboration." He will be chairman of its ten-member board, which will oversee an executive committee led by Urs Ruegsegger, who was recruited from St. Galler Kantonalbank to be group CEO. (Others joining the management team include top SWX exchange executives Jürg Spillman as deputy group CEO and head of derivatives markets; Heinrich Henckel, overseeing cash markets; and Jim Gollan, chief financial officer.) The infrastructure group, meanwhile, is part of an even bigger plan: SWX, SIS, Telekurs and the Swiss banking, insurance and funds associations unveiled a joint strategy on September 13 to support regulatory policies, tax incentives and other measures to create 40,000 to 80,000 new financial sector jobs and establish Switzerland "among the world's top-three centers of international finance" by 2015.

Jeffrey Sprecher

Chairman and CEO, IntercontinentalExchange

New to list

The parent companies of the Chicago Mercantile Exchange and Chicago Board of Trade didn't complete their merger in the second quarter of this year as they had planned. Jeffrey Sprecher of IntercontinentalExchange got in the way, mounting a competing bid for CBOT. He offered to keep its trading floor in place and is even moving ICE's technology operations to Chicago, yet he couldn't win the ultimate shareholder vote in July. But Sprecher has been a winner on virtually all other fronts, not least the stock market, where ICE's shares had appreciated 40 percent for the year as of September 25. Deal making has been the 52-year-old's MO from the start. Sprecher formed Atlanta-based ICE in 2000, using as its nucleus a regional power exchange he had acquired. The next year he bought London's International Petroleum Exchange, now ICE Futures Europe, where the benchmark Brent crude and West Texas intermediate crude oil futures contracts trade -- all electronically since the open-outcry floor was discontinued in April 2005. ICE bought the New York Board of Trade, now ICE Futures U.S., in January 2007, for $1 billion, and even while he was pursuing CBOT, Sprecher was adding ChemConnect, an online marketplace for natural-gas liquids; the Winnipeg Commodity Exchange; and options brokerage Chatham Energy to his string of acquisitions. ICE also entered into a clearing alliance with Canada's Natural Gas Exchange and served notice to LCH.Clearnet, which clears for ICE Futures Europe, that it will take its clearing business in-house next year in a new entity, ICE Clear Europe. "We're driving our screens into more and more countries," says Sprecher, "and within those countries, onto more and more desktops."

Leading the four in the Technology Providers category is Paul Caplin, founder and CEO of Caplin Systems in London, who in the late 1990s developed a protocol for distributing high-speed market data over the public Internet and today is supplying a new-generation foreign exchange and fixed-income trading systems to major banks. Caplin, who made his first appearance in the international Online 30 in 2001, was No. 17 last year. The three others are new to the list.

Paul Caplin

CEO, Caplin Systems

Last year's rank: 17

By providing speedy, industrial-strength trading performance using ordinary Internet interfaces, Caplin Systems won a major contract this year from French bank BNP Paribas, one of a number of sizable projects that helped push revenues 70 percent higher in the 12 months through March, according to founder and CEO Paul Caplin. He sees BNP Paribas's London installation of Caplin Trader as but one indication that after three years of cautious technology investing, banks are embracing an economical architecture for providing online trading portals to institutional customers. "Advanced Web technology is key to successful foreign exchange and fixed-income trading," says Caplin, 52. In 2006 the London-based software company developed a fixed-income and forex trading system for Citigroup that took less than a year from conceptualization to live production. "What has changed over the past year is our increasingly tight focus on fixed-income and forex trading," notes Caplin, who expects that his approach, utilizing Web 2.0­generation technology, will spill over into interest rate swaps and credit derivatives. "Usage of the Web for institutional trading is gaining tremendous momentum," he says.

Mark Akass

CTO, BT Global Financial Services

New to list

Before it acquired financial networking company Radianz from Reuters Group in 2005, London-based BT Group had a healthy, if unspectacular, business selling trading-floor workstations known as turrets along with technology consulting services to the financial industry. But that $175 million acquisition and a $3 billion, eight-and-a-half-year deal to sell network services back to Reuters made BT a premier supplier of trading-related communications services. "We now have a much stronger unit and a basis for a broad range of capabilities, globally, across all asset classes," says the unit's chief technology officer, Mark Akass, 46. BT increased customer sites connected to the Radianz infrastructure by 13 percent in 2006 as it expanded its low-latency network to Hong Kong, Singapore and Tokyo. In March it launched Radianz Ultra Access, which delivers one-millisecond round-trip data speeds between exchanges and brokers in the New York metropolitan area. Its consulting business inked a £578 million ($1.2 billion), five-year deal with Credit Suisse in February to run critical data and communications operations in conjunction with Swiss telecommunications company Swisscom Group. Gaining ground in the trading-workstation market against IPC Information Systems (see Lance Boxer, No. 29), BT now has "more than one in three turret positions globally," says Akass.

Darren Wesemann

CTO, SunGard Financial Systems

New to list

Its August 2005 leveraged buyout, led by Silver Lake Partners -- at the time the second-biggest in history, at $11.3 billion -- freed technology conglomerate SunGard Data Systems to focus on its businesses rather than on hitting the quarterly numbers that public shareholders demand. As a result, says Darren Wesemann, CTO of SunGard's financial systems unit, "we're changing the way software is delivered." The centerpiece of the effort is the Infinity system, designed to provide a range of financial applications across a network in a utilitylike model known as software as a service. It's an approach popularized by Salesforce.com in the customer relationship management sector. Wesemann, 39, describes Infinity as "infinitely configurable" and "software as a service on steroids." SunGard, which earned $532 million (up 8 percent) on $4.3 billion in revenue (7 percent) last year, has more than 25,000 customers, including the 50 biggest financial companies, in more than 50 countries. "At the end of the day, the banks have to compete with one another," Wesemann says. "They need solutions that they can put together in a very customized way."

Lance Boxer

CEO, IPC Information Systems

New to list

Early in the decade, when many financial institutions were just beginning to integrate the Internet into traditional business strategies, IPC Information Systems was on to a new big thing for trading floors: VoIP, or voice over Internet protocol. As of August, out of 105,000 IPC desktop trading installations in more than 40 countries, 57,000 were connected over the Net. Most of the VoIP expansion occurred on Lance Boxer's watch. "I think about unifying communications, where the desktop becomes a portal, a purposeful centerpiece for traders doing their jobs," says Boxer, 52, a former MCI chief information officer who took the helm at New York­based IPC in 2003. The growing acceptance of Internet connectivity has made IPC -- which private equity firm Silver Lake Partners acquired in September 2006 from Goldman Sachs Capital Partners for $800 million -- "incredibly profitable," says Boxer. Bank Chinatrust Indonesia and Generali Investments France are two recently announced buyers of IPC's technology. In June the company completed its acquisition of rival WestCom Corp. Boxer says the deal added to IPC's lead in the turret business, where its market share is more than 50 percent.

The complete Online Finance 30

CEO, OMX

Last year's rank: 12

Magnus Böcker was OM Group's technology chief, reporting to CEO Per Larsson in 2000, when the Stockholm-based regional exchange operator was attempting to outmaneuver Deutsche Börse in a takeover battle for the London Stock Exchange that both suitors ended up losing. After an ensuing power struggle, Larsson resigned in 2003, and Böcker took the top job at the renamed OMX. Amid the competition and consolidation, which have continued to intensify, Böcker's OMX became a prime acquisition target this year with none other than Larsson, now CEO of Borse Dubai, bidding for control against Nasdaq Stock Market, which was itself spurned by the LSE this year. All was resolved, in principle, last month when Nasdaq agreed to sell Borse Dubai a 19.99 percent stake and swap its 28 percent holding in the LSE for Dubai's interest in OMX. The deal should culminate in a merger of Nasdaq and OMX that values the Scandinavian outfit at $4.9 billion. The complex tie-up seems sweet vindication for Böcker. He had pursued Larsson's original strategy by steering OMX to Nordic and Baltic dominance as owner of the exchanges of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania and Sweden. And some 60 exchanges in more than 50 countries are users of OMX technology, which Nasdaq CEO Robert Greifeld sees as crucial to creating "the largest global network of exchanges and exchange customers linked by technology." Böcker, 45, has an equally impressive financial track record. OMX operating income increased 33 percent in 2006 from a year earlier, to 1.21 billion Swedish kronor ($177 million). The average number of trades per day rose 47 percent, to 124,484, and IPOs leaped to 103 from 41. "We will continue to build on the successful strategy that we put in place a few years ago," Böcker says, "and we should see growing use of our technology." He bolstered that tech base by acquiring the markets technology business of Australia's Computershare in 2006 for Skr250 million and Swedish financial data provider Findata in March 2007 for Skr78.5 million, including potential earn-outs.

2 Arman Falsafi

Managing Director for Europe and Asia, Chicago Mercantile Exchange

Last year's rank: 13

In 2006, another record year for the Chicago Mercantile Exchange, the world's largest marketplace for futures and options on futures, average daily volume surged 28 percent, to 5.3 million contracts. Of that total, 71 percent traded on the Globex electronic platform. That was before the July 12 completion of the CME's $11.9 billion merger with the Chicago Board of Trade. In August their combined average daily volume was 14.9 million contracts, 78 percent higher than a year earlier, and 77 percent traded electronically. International managing director Arman Falsafi isn't content to stop there, though. A record 10 percent of Eurodollar options contracts were screen-traded in August, but that left nearly 2 million more contracts per day to be converted. "We're spending a lot of time and money to have an open, transparent central marketplace for this stuff, rather than letting it go upstairs," says Falsafi, 40, who has been leading the CME's global march since relocating to London in July 2004 after three years heading global electronic trading and data in Chicago. Recent initiatives have included a partnership with the New York Mercantile Exchange for trading energy and metals contracts on Globex; the launching of FXMarketSpace, a foreign exchange market joint venture with Reuters Group; and the $15 million acquisition of London-based interest rate swaps platform Swapstream. "We're not trying to pick and choose winners; we're just feeding an enormous appetite," she says.

3 Dick Harryvan

Global Head, ING Direct

New to list

Decade-old ING Direct is "still a very fast-growing business," says Dick Harryvan, 54, who was named global head of the ING Group e-banking offshoot in April 2006. A 28-year veteran of the Dutch bancassurance giant and an original member of ING Direct's management team, Harryvan succeeded Hans Verkoren (No. 1 last year), who started the branchless bank in Canada and expanded it into Australia, Austria, France, Germany, Italy, the Netherlands, Spain, the U.K. and the U.S. Harryvan now expects to launch in Japan before year-end. Last year ING Direct's revenues were up 13.3 percent, to E2.39 billion ($3.2 billion), contributing 7 percent to group pretax profit of E10 billion. After adding about 3 million new customers annually for the past three years, it has 18.7 million account holders, more than any other online banking operation, Harryvan says. Four years ago, ING Direct entered the mortgage business (but steered clear of U.S. subprime lending); at year-end 2006, the bank had E70 billion in mortgages. Securities brokerage will be next, says Harryvan, adding, "Our vision is to become the world's preferred consumer bank, and not just for savings."

4 Frans Lindelöw

Deputy Head of Retail Banking, Nordea Bank

Last year's rank: 7

Nordea Bank, in a pre-2000 incarnation as Merita Bank in Finland, adopted electronic and Internet services as a core strategy at a time when most of its peers were gingerly dipping their toes into the new media. The pioneering has long since paid off. Stockholm-based Nordea serves nearly 50 percent of its 10 million customers online, a proportion approached by few of the world's full-service banks. Coming full circle, Frans Lindelöw, the 44-year-old deputy head of retail banking, is emphasizing the complementary value of Nordea's 1,200 branches. He plans to open 150 in Poland over the next two years and possibly look for acquisitions in the Nordic and Baltic regions. The E382 billion-in-assets ($523 billion) bank saw its share price jump 45 percent last year as it earned E3.82 billion in operating profit, and in March 2007 it acquired 75 percent of Russia's 35-branch JSB Orgresbank, for $314 million. Online activity isn't flagging: E-banking customers increased by 7 percent last year, and their number of log-ons jumped 18 percent, to 240 million. "The basis of our strategy now is to sell more products to our existing clients and migrate customers up the pyramid" to join the ranks of 2.3 million Gold account holders, who have at least E30,000 in the bank, explains Lindelöw. "All the cornerstones are in place," he says. "Now it's just a case of fine-tuning."

5 Jean-François Théodore

Deputy CEO, NYSE Euronext 

Last year's rank: 2

Jean-François Théodore forged the multinational Euronext exchange by combining the principal securities markets of Amsterdam, Brussels, Lisbon and Paris and the London Interbank Financial Futures and Options Exchange in the early part of this decade. Then he reached across the Atlantic to consummate the landmark E10.3 billion ($13.7 billion) NYSE Group-Euronext merger on April 4, preserving Euronext as a separately regulated European marketplace that might have lost its autonomy had it accepted a competing offer from Germany's Deutsche Börse. Théodore, 60, also maintained his position as chief executive and chairman of Euronext's managing board while ranking as deputy CEO to John Thain at headquarters in New York. NYSE Euronext is aiming for E275 million in annual synergy benefits by 2010, more than 90 percent of that resulting from harmonized electronic platforms. "We won't have a single platform for the NYSE and Euronext because of the different regulatory environments, but we will have the same basic system, the same IT provider and fewer computer centers," says Théodore. That lowers "a barrier to common trading," he says, "and should boost liquidity, with more Europeans trading on the NYSE and more Americans trading on Euronext." Looking longer term, Théodore wants Euronext to be the focal point of further consolidation in Europe. "We have kept our structure through the recent merger so that other European exchanges will find it attractive to join our organization," he says.

6  Reto Francioni 

CEO, Deutsche Börse

Last year's rank: 3

The architect of a resurgent SWX Swiss Exchange earlier this decade, Reto Francioni moved into the hot seat two years ago when he was named CEO of Deutsche Börse, facing activist shareholders who had ousted the previous management to protest its bid for the London Stock Exchange. A lagging stock, which was trading at 22.6 times estimated 2007 earnings last month compared with the LSE's 25.7, NYSE Euronext's 29.0 and CME Group's 37.2, has done little to soothe investor anger. Facing vocal hedge fund critics Atticus Capital of New York and London's the Children's Investment Fund, the 52-year-old Francioni changed the subject on April 30, announcing an agreement to acquire New York­based electronic options and stock exchange operator International Securities Exchange for $2.8 billion. Pending completion this quarter, ISE will combine with Deutsche Börse­controlled Eurex as a derivatives-market counterpunch to July's CME­Chicago Board of Trade merger (see Arman Falsafi, No. 2). The company's Frankfurt Stock Exchange, Eurex Clearing and Clearstream units have all announced technology, efficiency and price-reduction initiatives in recent months. Last month Deutsche Börse unveiled a plan to reduce annual expenses by E100 million ($140 million) within three years and to buy back 10 percent of its shares to address valuation concerns. Still, some analysts believe Deutsche Börse would be worth more if it were to divest Clearstream and its Xetra stock trading platform and merge Eurex with the CME or another rival. Eurex has been thriving, with volatility driving its August average daily contract volume to 7.6 million, a year-over-year gain of 3 million. "We believe that the sum of Deutsche Börse is worth more than the parts," says Francioni.

7  Michael Spencer

Group CEO, ICAP

Last year's rank: 4

London-based ICAP, the world's largest interdealer brokerage, bears little resemblance to the predominantly voice-and-manual operation that CEO Michael Spencer resolved to transform several years ago. Having succeeded in creating a sleek, high-tech transaction machine, Spencer says his goal is to build a "high-speed global network" for over-the-counter financial products "that are increasingly traded around the clock." More than half of ICAP's average daily transaction volume of $1.5 trillion is electronic, and on two days in August ICAP's EBS and BrokerTec electronic platforms combined to handle in excess of $1.2 trillion. Trumpeting those records in early September, Spencer, 52, cited the two systems' "strong liquidity, tight spreads and robust performance in the face of highly volatile trading." BrokerTec, a top U.S. Treasuries platform that ICAP acquired from several investment banks in 2003, and spot foreign exchange leader EBS, which ICAP bought from a bank consortium in June 2006, are foundations for Spencer's expanding network. In April, ICAP introduced i-Forwards, a platform for short-dated currency forwards, initially in Europe, followed by i-Sec for securities lending markets in France, Germany, Italy, Spain, the U.K. and Japan. As EBS continuously adds currency pairs -- sterling-yen and U.S. dollar­Turkish lira are recent examples -- Spencer has gone farther afield: In February he announced a joint venture with insurance brokerage Jardine Lloyd Thompson Group to develop derivatives based on insurance risks; and in May, ICAP acquired London shipping brokerage J.E. Hyde, with which it is developing freight derivatives. In September, ICAP completed its first total return swap transaction based on RPX, an index tracking U.S. home prices.

8  Olivier Le Grand

Chairman and CEO, Cortal Consors

Last year's rank: 6

Assets under management at Cortal Consors, Europe's biggest online brokerage and mutual fund complex, grew 21 percent last year, to E33.8 billion ($46.3 billion), as operating income leaped 122 percent, to E68 million. While aggressively expanding its network of independent advisers in France and Germany, Cortal Consors in March announced its entry into India by way of parent company BNP Paribas's acquisition of at least 34.35 percent of Geojit Financial Services of Kerala. Besides gaining access to the Indian brokerage's 400 branches, Paris-based Cortal Consors aims to offer online services to the 24 million Indians who live outside their home country, including those in the Gulf region, says chairman and CEO Olivier Le Grand, 54. This year Cortal Consors is extending the services of its B*capital subsidiary, which provides advice and derivatives trading to wealthy individuals, from France to its other European markets -- Belgium, Germany, Luxembourg and Spain. B*capital generated "strong interest" in France, Le Grand says, "so I think it will be a good service to export -- maybe one day to the emerging markets too."

9  Vincent Taupin

Chairman and CEO, Boursorama

Last year's rank: 8

Orders in Boursorama's brokerage business were up 50 percent last year, from 4.4 million to 6.6 million, and CEO Vincent Taupin has a simple explanation: "A year ago we were just offering brokerage and savings products," he says, "now we are a full-service bank, so you can have everything." Taupin estimates that two thirds of Boursorama's roughly 500,000 customers are brokerage clients, with the rest using banking, mutual fund and life insurance services. "We are now the largest online bank in France," says Taupin, 47, adding, "it has been a tough job." Last year the Paris-based bank, which is controlled by Société Générale, merged with CaixaBank France in a transaction that gave the latter's Spanish parent, CaixaHolding, a 19.9 percent stake in Boursorama. The company has shuttered 35 of CaixaBank France's 55 branches; the remaining 20 are the first bricks-and-mortar outlets for what had been a purely online venture. Boursorama boosted pretax profits last year to E43 million ($56.8 million), from E22.4 million in 2005, despite E7.3 million in merger costs related to CaixaBank and the 2005 acquisition of U.K. brokerage Squaregain. Assets in 2006 jumped 63 percent, to E12.2 billion. Taupin talks mainly about growth in countries "where we are already active," as well as in Germany and Spain. On September 24, Boursorama announced it had agreed to purchase 77 percent of German financial portal OnVista for E138 million.

10  Andre Carls

CEO, Comdirect Bank

Last year's rank: 10

Comvalue, a three-year campaign launched in 2005 by German online powerhouse Comdirect to attract customers to its combination of banking, brokerage and advisory services, has "overperformed," increasing the customer base by 23 percent last year, says CEO Andre Carls. He adds that there was "even more growth profit-wise": 62.2 percent pretax, to E85.6 million ($117.2 million). The Quickborn, Germany­based subsidiary of Commerzbank has E17.1 billion in assets, and is staying focused on Germany, whose online banking market is growing 20 percent a year. More than 600,000 of Comdirect's 820,000 clients are brokerage customers, making it Germany's leader in online brokerage. The bank projects it will have 1.3 million customers and a pretax profit of more than E100 million by 2009. Accordingly, Comdirect aims to invest up to E150 million in a growth strategy over the next three years. In early 2006, Comdirect acquired 44,000 accounts in Germany from American Express Bank. The 43-year-old Carls says Comdirect is open to similar acquisitions -- customers of American Express tend to be comfortable with online banking and interested in securities. Comdirect is "concentrating on growth in direct banking -- customer acquisition will center on our current account" and a call money, or money market, account, says Carls, adding that the bank is also looking to expand its fund business and is exploring mortgage products.

11 Alexander von Uslar 

CFO, DAB Bank

Last year's rank: 9

What makes DAB Bank unique "is that we have a combination of retail and institutional business that no other competitor offers in Germany," says 40-year-old Alexander von Uslar, the management board member responsible for finance, personnel, legal affairs and other key functions at the HVB Group affiliate. DAB's client base grew 7 percent last year, to 1 million. Year-end 2006 assets of E29.6 billion ($39.1 billion) were up from E25 billion a year earlier. Von Uslar says that 60 percent of independent financial advisers in Germany do business with DAB's growing institutional side. The bank also holds a 70 percent share of the Austrian online brokerage market through its direktanlage.at subsidiary, which it acquired in 2002. That compares with its 21 percent share of the German market. DAB expects pretax income of E45 million this year, up from E35 million in 2006, which in turn was 50 percent higher than in 2005. "It's a nicely growing market," says von Uslar. DAB started offering online banking to existing customers in November 2006. "We want clients to feel that they have one-stop shopping," explains von Uslar, who was chief legal adviser on DAB's 1999 initial public offering and spearheaded the 2005 purchase of FSB FondsServiceBank, which added 400,000 institutional accounts. Regarding further acquisitions, von Uslar says, "show me a target" -- but he sees no opportunities at present.

12  Oki Matsumoto

President and CEO, Monex Beans Holdings

Last year's rank: 11

A price war in Japan's online brokerage market has cut commissions to the bone, but Oki Matsumoto, founder of Monex Beans Holdings, Japan's second-largest online brokerage, refuses to join the fray. He regards that kind of competition as "a big waste." He says, "We have a different strategy." He'll let others slug it out for what he terms "the very small, active trader." Matsumoto wants to lower Monex's dependence on brokerage commissions from today's 66 percent of revenue to 50 percent, while raising the contribution of mutual funds, alternative investments, bonds and investment banking from about 15 percent to 50 percent. "We think we should give Japanese consumers, who hold $14 trillion in assets, the opportunity to have some alpha," says Matsumoto, 43, a former Goldman, Sachs & Co. bond trader who founded Monex in 1999 with Sony Corp. as a minority shareholder. Monex wants to contribute to that process by offering online purchases of funds of hedge funds, private equity funds and mutual funds. Already the biggest online distributor of mutual funds in Japan, Monex has $250 million under management in two funds of funds, a private equity fund managed by Carlyle Group and J.C. Flowers & Co., and a China A-share fund it offers in conjunction with Fullerton Fund Management Co., a unit of Singapore's state-owned Temasek Holdings. Matsumoto's medium-term target for assets under management is $3 billion. "We think there is a huge opportunity," he says.

13  Peter Gomez 

Chairman, SWX Group

New to list

If SWX Group in Zurich had a bigger footprint, then Reto Francioni (No. 6) might have been content to stay on as group chairman and CEO rather than move to the top job at Deutsche Börse in September 2005. SWX, though a pioneer in derivatives trading and technology, was -- and is -- only a minority partner in Deutsche Börse's Eurex derivatives exchange. The Swiss exchange's London-based virt-x cross-border electronic exchange and the Scoach structured products market, also a joint venture with Deutsche Börse, are innovative, but only niche markets. Under Peter Gomez, SWX is focusing on its home market in a bid to shore up its position. A business professor who since 2005 has been dean of the Executive School of Management Technology and Law at the University of St. Gallen, the 60-year-old Gomez became SWX's chairman in May 2006. A year later he concluded negotiations to merge SWX with the Swiss clearing organization SIS Group and financial information giant Telekurs Group, signing a 20-year agreement among the Swiss banks that own the entity to keep potential predators at bay. When this "integrated infrastructure that spans the entire value chain," as Gomez calls it, officially opens its doors in January, it will create new "possibilities for international collaboration." He will be chairman of its ten-member board, which will oversee an executive committee led by Urs Ruegsegger, who was recruited from St. Galler Kantonalbank to be group CEO. (Others joining the management team include top SWX exchange executives Jürg Spillman as deputy group CEO and head of derivatives markets; Heinrich Henckel, overseeing cash markets; and Jim Gollan, chief financial officer.) The infrastructure group, meanwhile, is part of an even bigger plan: SWX, SIS, Telekurs and the Swiss banking, insurance and funds associations unveiled a joint strategy on September 13 to support regulatory policies, tax incentives and other measures to create 40,000 to 80,000 new financial sector jobs and establish Switzerland "among the world's top-three centers of international finance" by 2015.

14  Chanda Kochhar

Deputy Managing Director and Head of International Business, ICICI Bank

New to list

With ICICI Bank secure in its position as India's leading retail bank, Chanda Kochhar is driving expansion into Canada, Germany and the U.K. by online means. Since Kochhar, who had been the bank's consumer chief for five years, took over as head of international banking in October 2006, Mumbai-based ICICI has seen online customers' deposits in Canada and the U.K. -- markets it entered three years ago -- rocket 70 percent, to $4.5 billion. "We believe our technology costs are about one sixth of what a global bank would spend," says Kochhar, 45. "We outsource everything back to India and run it off our technology platform there." She is referring to a back-office processing factory with a staff of 1,500, and two call centers with a total of 1,700 customer service representatives who serve 7 million customers, 5.4 million of them with online accounts. "That [factory] gives us a huge competitive advantage," she says. It benefits customers in the form of interest rates typically 25 basis points higher than the competition's on savings acconts. Kochhar sees growth potential in Germany, which ICICI entered this year, on a par with that in Canada and the U.K. The overriding objective is to make ICICI's online proposition "so competitive that it is really worthwhile to customers in a lot of countries where we may not be able to roll out a big physical presence," says Kochhar.

15  James Toffey

President, Equity, Fixed Income & Retail Wealth Management, Thomson Financial

Last year's rank: 15

James Toffey saw the potential of the Web in the mid-1990s, while heading up fixed-income trading at Credit Suisse First Boston. He got backing from eight investment banks to launch TradeWeb, initially to trade government securities. With a growing and increasingly international fixed-income product menu along with a posttrade automation facility, TradeWeb was acquired in 2004 by Thomson Corp. for a cool $530 million. Toffey, now 46, stayed on as CEO while taking charge of a broader portfolio of Thomson Financial businesses that will soon gain further heft when the Toronto-based company merges with Reuters Group. Last year TradeWeb set a volume record of $51 trillion, beating the previous year's $42.8 trillion. "We've cracked the code on creating a paperless trading environment," says Toffey. Now handling 14 product sets, including mortgage-backeds and credit derivatives, TradeWeb this year has introduced U.S. dollar convertible bonds, extended trading hours so that Asian customers can trade during their normal market hours, and expanded the TradeWeb Retail platform. "Our strategy is to be able to trade any security in the world, anywhere, with any bank, anytime," says Toffey.

16  Simon Wilson-Taylor

Global Head of Global Link, State Street Corp.

Last year's rank: 18

With the completion in March of its $564 million acquisition of online foreign exchange platform Currenex, State Street Corp. supplemented its FX Connect platform for buy-and-hold institutional investors with another geared for active traders. Now Boston-based State Street directly serves "hedge fund and other leveraged funds traders as well as banks that require a much more active and dynamic trading environment," says Simon Wilson-Taylor, 50, global head of State Street's Global Link e-finance unit. FX Connect, which pioneered e-FX trading in the mid-1990s, had already captured an estimated 78 percent of the asset manager market, up from 70 percent a year earlier, says Wilson-Taylor, and Currenex, which has more than 70 banks on its eight-year-old network, should attract more money managers. FX Connect's high-water mark in single-day trading volume last year came in December, with $108 billion, and total volume in 2006 was 51 percent more than in 2005. Currenex, meanwhile, grew 75 percent in 2006. "We are going to move more into the hedge fund sector across multiple asset classes," vows Wilson-Taylor.

17  Paul Caplin

CEO, Caplin Systems

Last year's rank: 17

By providing speedy, industrial-strength trading performance using ordinary Internet interfaces, Caplin Systems won a major contract this year from French bank BNP Paribas, one of a number of sizable projects that helped push revenues 70 percent higher in the 12 months through March, according to founder and CEO Paul Caplin. He sees BNP Paribas's London installation of Caplin Trader as but one indication that after three years of cautious technology investing, banks are embracing an economical architecture for providing online trading portals to institutional customers. "Advanced Web technology is key to successful foreign exchange and fixed-income trading," says Caplin, 52. In 2006 the London-based software company developed a fixed-income and forex trading system for Citigroup that took less than a year from conceptualization to live production. "What has changed over the past year is our increasingly tight focus on fixed-income and forex trading," notes Caplin, who expects that his approach, utilizing Web 2.0­generation technology, will spill over into interest rate swaps and credit derivatives. "Usage of the Web for institutional trading is gaining tremendous momentum," he says.

18  Philip Weisberg

CEO, FXall

Last year's rank: 20

In February, New York­based FXall went live with Accelor, an anonymous order-matching system for foreign exchange. In effect an electronic communications network for bank, hedge fund and other professional traders, Accelor is "the most exciting and significant development" since FXall launched its original, relationship-based (read: nonanonymous) platform in 2001, says CEO Philip Weisberg, 39. "We're a good provider of this technology because we're neutral," he asserts. That view has been endorsed in more ways than one. ABN Amro Bank, Bank of America, Citigroup and others are on Accelor. FXall's trading volume last year jumped 46 percent, to $9.8 trillion, and its first-quarter figure, including a record $73 billion day in March, was up 41 percent year over year. Consortium-owned FXall got a $77.5 million minority equity investment last year from Technology Crossover Ventures of Palo Alto, California, which will allow the company "to grow our technology even faster," Weisberg says.

19  Jeffrey Sprecher

Chairman and CEO, IntercontinentalExchange

New to list

The parent companies of the Chicago Mercantile Exchange and Chicago Board of Trade didn't complete their merger in the second quarter of this year as they had planned. Jeffrey Sprecher of IntercontinentalExchange got in the way, mounting a competing bid for CBOT. He offered to keep its trading floor in place and is even moving ICE's technology operations to Chicago, yet he couldn't win the ultimate shareholder vote in July. But Sprecher has been a winner on virtually all other fronts, not least the stock market, where ICE's shares had appreciated 40 percent for the year as of September 25. Deal making has been the 52-year-old's MO from the start. Sprecher formed Atlanta-based ICE in 2000, using as its nucleus a regional power exchange he had acquired. The next year he bought London's International Petroleum Exchange, now ICE Futures Europe, where the benchmark Brent crude and West Texas intermediate crude oil futures contracts trade -- all electronically since the open-outcry floor was discontinued in April 2005. ICE bought the New York Board of Trade, now ICE Futures U.S., in January 2007, for $1 billion, and even while he was pursuing CBOT, Sprecher was adding ChemConnect, an online marketplace for natural-gas liquids; the Winnipeg Commodity Exchange; and options brokerage Chatham Energy to his string of acquisitions. ICE also entered into a clearing alliance with Canada's Natural Gas Exchange and served notice to LCH.Clearnet, which clears for ICE Futures Europe, that it will take its clearing business in-house next year in a new entity, ICE Clear Europe. "We're driving our screens into more and more countries," says Sprecher, "and within those countries, onto more and more desktops."

20  Rose Leng

Head of Direct Propositions, HSBC Direct Asia-Pacific

New to list

When HSBC Holdings launched HSBC Direct in Asia last year, it turned to Rose Leng, a former Microsoft Corp. and Walt Disney Co. TV executive with no banking experience. "They were serious about not having the baggage of their traditional banking legacy," says Leng, a Hong Kong native who has an MBA from Northwestern University's Kellogg School of Management. "They wanted somebody with a fresh eye who could look at things from outside the box." Introduced in September 2006 in Taiwan, and paying up to 0.5 point higher than the local 1 percent deposit interest rate, HSBC Direct took just five weeks to garner as many deposits as one of the bank's eight branches there did in five years. In four weeks following its February 1 launch in South Korea, offering 5 percent rather than the prevailing bank rate of 0.5 percent, HSBC Direct attracted deposits equal to 20 percent of the total demand deposits at its 11 Korean branches. By the end of June, HSBC Direct had $900 million in new Taiwanese and Korean deposits from more than 120,000 customers. In Taiwan, where regulators require that new accounts be confirmed in person via signed forms, HSBC Direct sends personnel out into the field: 25 percent of new-account documents are signed at Starbucks coffee bars. Leng is considering future expansion in Australia, China, India, Japan, Singapore and Vietnam.

21  Mark Akass

CTO, BT Global Financial Services

New to list

Before it acquired financial networking company Radianz from Reuters Group in 2005, London-based BT Group had a healthy, if unspectacular, business selling trading-floor workstations known as turrets along with technology consulting services to the financial industry. But that $175 million acquisition and a $3 billion, eight-and-a-half-year deal to sell network services back to Reuters made BT a premier supplier of trading-related communications services. "We now have a much stronger unit and a basis for a broad range of capabilities, globally, across all asset classes," says the unit's chief technology officer, Mark Akass, 46. BT increased customer sites connected to the Radianz infrastructure by 13 percent in 2006 as it expanded its low-latency network to Hong Kong, Singapore and Tokyo. In March it launched Radianz Ultra Access, which delivers one-millisecond round-trip data speeds between exchanges and brokers in the New York metropolitan area. Its consulting business inked a £578 million ($1.2 billion), five-year deal with Credit Suisse in February to run critical data and communications operations in conjunction with Swiss telecommunications company Swisscom Group. Gaining ground in the trading-workstation market against IPC Information Systems (see Lance Boxer, No. 29), BT now has "more than one in three turret positions globally," says Akass.

22  Alasdair Haynes

CEO, ITG Europe

Last year's rank: 22

Equity trading in dark liquidity pools, away from exchanges, is more a novelty in Europe than in the U.S. and Canada, but ITG Europe CEO Alasdair Haynes is convinced that is about to change. His firm is ready, having built a name for itself as a cost-effective crossing network for relatively illiquid stocks, an extension of the business of its parent, Investment Technology Group in New York, whose Posit crossing network is one of the longer-established U.S. dark pools. In Europe, ITG and a handful of competitors made limited inroads against the efficient electronic trading systems of incumbent bourses and were up against concentration rules that limited off-exchange trading in many countries. The European Union's Markets in Financial Instruments Directive, which takes effect in November, will not only abolish concentration rules but will also require brokers and fund managers to provide best execution to clients. ITG converted in March from a system that matched trades eight times daily in more than 9,000 stocks from 30 countries to a continuous service that pairs buy and sell orders throughout the day. "With MiFID leveling the playing field, we are now prepared to make inroads in the more liquid midcap and big-cap stocks," says Haynes, 46. His unit contributed to a 50 percent jump in ITG's second-quarter non-U.S. operating revenues, to $42 million.

23  Simon Nathanson

CEO, NeoNet Securities

Last year's rank: 23

In March, Stockholm-based brokerage NeoNet Securities, which offers cross-border direct market access to institutional investors and to other brokerage firms, announced connections to its first Asian centers -- the Tokyo Stock Exchange, Osaka Securities Exchange and Jasdaq Securities Exchange. The Hong Kong Stock Exchange and Singapore Stock Exchange followed in June, bringing NeoNet's network to 25 exchanges. "Asia makes us a true global player," says CEO Simon Nathanson, 46, who joined NeoNet in 2004, when the global trading services strategy was sputtering. But as cross-border investing took off, so did NeoNet. Last year revenues increased by 54 percent, to 397.1 million Swedish kronor ($58 million). Revenues (Skr309.8 million) and operating income (Skr83.8 million) set records in the first half of 2007, and Nathanson's revenue target for 2010 is Skr800 million. NeoNet's more than 200 clients in 22 countries trade in nine to ten markets on average, up from eight in 2006 and four in 2004. Late last year Sweden's Handelsbanken Capital Markets signed on for NeoNet XG, a hosted service based on a licensing fee rather than commission; other, undisclosed firms have also bought the service. That puts the brokerage in the role of independent software vendor, which, Nathanson says, "is a new and more stable revenue stream, not as dependent on turnover in the markets."

24  Darren Wesemann

CTO, SunGard Financial Systems

New to list

Its August 2005 leveraged buyout, led by Silver Lake Partners -- at the time the second-biggest in history, at $11.3 billion -- freed technology conglomerate SunGard Data Systems to focus on its businesses rather than on hitting the quarterly numbers that public shareholders demand. As a result, says Darren Wesemann, CTO of SunGard's financial systems unit, "we're changing the way software is delivered." The centerpiece of the effort is the Infinity system, designed to provide a range of financial applications across a network in a utilitylike model known as software as a service. It's an approach popularized by Salesforce.com in the customer relationship management sector. Wesemann, 39, describes Infinity as "infinitely configurable" and "software as a service on steroids." SunGard, which earned $532 million (up 8 percent) on $4.3 billion in revenue (7 percent) last year, has more than 25,000 customers, including the 50 biggest financial companies, in more than 50 countries. "At the end of the day, the banks have to compete with one another," Wesemann says. "They need solutions that they can put together in a very customized way."

25  Sunil Hirani

CEO, Creditex Group

Last year's rank: 28

In November 2006, Creditex, the trailblazing electronic trading platform developer for the credit derivatives market, completed its acquisition of CreditTrade, the London-based brokerage. "CreditTrade had strengths in areas that we didn't have, and it was a very good fit," says Sunil Hirani, 40, founder and CEO of Creditex in New York. Those strengths included index products in New York, structured credit in London and certain single-name and emerging-markets sectors in New York and London, explains Hirani. About 20 percent of dealer-to-dealer credit default swaps (CDS) trades are now done through Creditex. Hirani acknowledges that getting dealers to execute big block trades electronically remains a challenge. He expects Creditex to continue expanding along with the CDS market overall, though 100 percent annual growth rates won't continue forever. "We have two strategies for expansion, one that is organic and one that is M&A-led. We're not going to shy away from investing in one or both," Hirani says. "We're hoping to leverage what we've done in North America and Europe" in Asia-Pacific markets, notably Australia and Japan. Creditex is extending its market reach through a May 2007 investment in loan-trading settlement servicer Trade Settlement and through spin-offs T-Zero (see Mark Beeston, No. 28) and Q-Wixx, a platform for large CDS portfolio trades that opened in December.

26  Chip Carver

CEO, SwapsWire

Last year's rank: 24

For London-based SwapsWire, which started out in 2002 supporting confirmations and other posttrade services for interest rate swaps and now covers much of the over-the-counter derivatives spectrum, "increased usage on the buy side is the most significant" new development, says CEO Chip Carver. In 2006 total trade-event confirmations doubled, exceeding 1 million for the first time. "We solidified our links with LCH.Clearnet Group," says Carver, 47, referring to the London clearinghouse, 90 percent of whose SwapClear transactions in 2006 went over SwapsWire, which is owned by 21 derivatives dealers. SwapsWire has progressively introduced equity derivatives services around the world -- brokerages ICAP, Linkbrokers Derivatives Corp. and TFS Derivatives Corp. recently completed their global rollouts by going live in North America -- along with new currencies for interest rate swaps, including the Chinese yuan and Indian rupee.

27  Lance Uggla

CEO, Markit Group

New to list

Markit Group of London and New York is hardly alone in capitalizing on the explosive growth in OTC derivatives, but it stood apart during the recent subprime-mortgage-induced market turmoil. Markit, which Lance Uggla, formerly of Toronto Dominion Bank's TD Securities, founded in 2001 to supply independent valuations on illiquid credit instruments, is the calculation and administration agent for the now closely watched ABX and CMBX synthetic indexes, among others. That brought visibility to a behind-the-scenes data aggregator and processor that has 330 employees and serves 1,000 customers around the world. Early this year, the firm won a contract to be the business manager of the U.K. equity trade-reporting consortium Project BOAT. That's a play on Europe's Markets in Financial Instruments Directive, which could boost demand for Markit's core services. "If MiFID really takes hold," says the 45-year-old Uggla, "other OTC asset classes will inevitably require proof of best execution."

28  Mark Beeston

President, T-Zero

Last year's rank: 30

The credit derivatives market has been roughly doubling every year in notional value outstanding. London-based T-Zero's trade affirmation activity has been growing at multiples of that rate, albeit from a small base. President Mark Beeston, 36, who left Deutsche Bank as COO of global credit trading in 2005 to run the posttrade spin-off of Creditex (see Sunil Hirani, No. 25), says it has brought in 135 buy-side users. He expects virtually every major dealer to be on the platform by year-end. "Our system exposes what one party believes it has executed immediately to its counterparty," explains Beeston. In the process the system avoids the errors or missing allocation details that historically plagued these complex OTC transactions. Though Beeston sees plenty of room for growth in Europe and the U.S., he has started "looking at the best model for supporting Asia," where the credit derivatives market is less liquid. He acknowledges that the system may ultimately be applied to other asset classes, but he isn't ready to elaborate.

29  Lance Boxer

CEO, IPC Information Systems

New to list

Early in the decade, when many financial institutions were just beginning to integrate the Internet into traditional business strategies, IPC Information Systems was on to a new big thing for trading floors: VoIP, or voice over Internet protocol. As of August, out of 105,000 IPC desktop trading installations in more than 40 countries, 57,000 were connected over the Net. Most of the VoIP expansion occurred on Lance Boxer's watch. "I think about unifying communications, where the desktop becomes a portal, a purposeful centerpiece for traders doing their jobs," says Boxer, 52, a former MCI chief information officer who took the helm at New York­based IPC in 2003. The growing acceptance of Internet connectivity has made IPC -- which private equity firm Silver Lake Partners acquired in September 2006 from Goldman Sachs Capital Partners for $800 million -- "incredibly profitable," says Boxer. Bank Chinatrust Indonesia and Generali Investments France are two recently announced buyers of IPC's technology. In June the company completed its acquisition of rival WestCom Corp. Boxer says the deal added to IPC's lead in the turret business, where its market share is more than 50 percent.

30  Masakatsu Saito

President and CEO, Kabu.com Securities Co.

New to list

In the eight years since Japan deregulated equity brokerage commissions, online securities firms have accounted for more than 90 percent of retail transaction volume on the Tokyo Stock Exchange. Where can they turn for more growth? Monex (see Oki Matsumoto, No. 12) and others are looking at asset management products, but Masakatsu Saito, 40, who heads Kabu.com Securities Co., still sees opportunity in equities. In September 2006, Kabu launched a first-of-its-kind, auction-based proprietary trading system, Kabu.com PTS, for after-hours trading. Hits from online clients number in the hundreds of thousands, though completed transactions are well below that level because of wide spreads between bids and offers. Saito says that will change with the introduction of institutional liquidity, which will "turn PTS into a two-way street." He adds, "With only individuals using the services, there's a tendency for everyone to want to buy or sell the same stock at the same time." Kabu devoted ¥2 billion ($17 million) and seven years to developing its PTS, and it has imitators. E*Trade Securities Co., for one, formed a consortium with four smaller firms to launch a competing PTS, and Matsui Securities Co. applied for a license from the Financial Services Agency, Japan's securities regulator, to offer a daytime PTS with immediate settlement. Those rivals, unlike Kabu, outsource their technology. Saito's rationale for in-house development: "Once all equities are reduced to digital data, broking will be a part of the IT industry. By the time war breaks out, Kabu must have the best service in the market."