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The Online Finance 40

Our annual ranking of top e-finance innovators.

Reeling from more than a year of market turmoil, the financial industry is in cutback mode — but not when it comes to technology. With virtual unanimity the leading financial technology innovators on Institutional Investor’s ninth annual Online Finance 40 list say that their initiatives and investments are too critical to put on hold. Many have revenues, profits and double-digit growth to show for, and justify, their efforts. These are, in many ways, technology businesses. Paul Galant (No. 9), CEO of Citigroup’s Global Transaction Services, calls his unit “a technology company with a banking license”; it earned $1.4 billion on $4.7 billion in revenue in the first half of 2008. Interactive Brokers Group, up 48 percent, to $923.8 million, in first-half net revenues, is “basically a software shop,” says chairman and CEO Thomas Peterffy (No. 25). Archrival exchange operators OMX Group and NYSE Euro­next are in direct technology combat. Nasdaq OMX increased market technology revenues 22 percent in the first half, to $69.8 million, and CEO Robert Greifeld (No. 1) is pushing technology aggressively as ever-growing volumes pose “a fundamental challenge to the exchanges.” Lawrence Leibowitz (No. 2), head of U.S. markets and global technology at NYSE Euro­next, which nearly doubled first-half software and technology services revenue, to $226 million, agrees that “exchanges need to be in the technology business.”

The online stars are remarkably upbeat. Seth Merrin (No. 7), CEO of Liquidnet Holdings, is taking his company public. Robert Huret (No. 27), a founding partner of FTVentures, recalling previous downturns, is convinced that the current one “won’t be that bad.” Tech sales can even rise because “it’s a good time to get your house in order,” says Karen Maguire (No. 36), CEO of Satuit Technologies.


1. Robert Greifeld

CEO, Nasdaq OMX Group

Last year’s rank: 12

Nasdaq OMX Group is flexing its muscles as what CEO Robert Greifeld calls “a diversified global exchange operator” — which is how Nasdaq Stock Market redefined itself after its February merger with Stockholm-based OMX — with the planned September 26 launch of Nasdaq OMX Europe. Listing some 700 European blue chips, the London-based cross-border market “represents the transformation of Nasdaq from a U.S.-focused cash equity exchange,” says Greifeld, 51. Nasdaq is taking advantage of European regulations introduced at the end of 2007 that encourage new competitors to take on established exchanges and push brokers to achieve best execution for their clients. Greifeld defines Nasdaq’s strengths as speed and reliability combined with smart order routing “to other execution destinations if they have a better price.” The competition and openness “will break down the pricing monopolies that have existed in Europe for some time,” he adds. Even as Nasdaq expands abroad, Greifeld isn’t averting his gaze from the target that has preoccupied him in his five years at Nasdaq’s helm: NYSE Euronext. On July 11, Nasdaq for the first time traded more NYSE shares than NYSE did, by a slim 25.9 percent to 25.8 percent market-share margin. “Three years ago Nasdaq executed 0 percent,” notes Greifeld. “Bringing to market a better trading platform that has essentially resulted in the destruction of the 200-year-old [NYSE] trading floor is obviously a major accomplishment.”

2. Lawrence Leibowitz

Head of U.S. Markets and Global Technology, NYSE Euronext

Not ranked last year

NYSE Euronext wants to conquer the exchange world, and that means Lawrence Leibowitz has his work cut out for him. Leibowitz, formerly COO of UBS Americas Equities, joined the New York Stock Exchange’s parent in July 2007 as executive vice president and COO of U.S. products. After president Duncan Niederauer (No. 2 last year) was appointed CEO in December, Leibowitz became head of U.S. markets and global technology. Among his responsibilities are integration of the company’s equity platforms, the U.S. options business and the advanced trading solutions division, which includes two NYSE acquisitions: market-connectivity technology supplier TransactTools and market-data systems developer Wombat Financial Software. Says Leibowitz, “We are making excellent progress in the consolidation of our global technology platforms through the development of our Universal Trading Platform,” a gateway into the markets that represents “the synergies we highlighted when the NYSE-Euronext merger was completed in April 2007.” Leibowitz, 47, built an extensive institutional e-trading résumé as CEO of the RediBook electronic communications network in the 1990s, co-head of Schwab Capital Markets in the early 2000s and, while with UBS, founding chairman of the BIDS Trading alternative trading system, with which NYSE announced a joint block-trading venture last year.

3. Clyde Ostler

Group Executive Vice

President, Internet Services Group and Wealth Management Group

Wells Fargo & Co.

Last year’s rank: 6

Wells Fargo & Co. was one of the first major banks to offer Internet services, starting in the mid-1990s. Today the online business overseen by group executive vice president Clyde Ostler handles more customer interactions per month than do Wells’s branches, call centers and automated teller machines combined. The number of active online retail customers rose 14 percent over the past year, to 10.6 million, plus there are 1.1 million online small businesses, up 20 percent. “We used to say we could offer every product and service online except those that require a signature, give cash or take a deposit, and that’s not true anymore,” says Ostler, 61, a leader of the San Francisco–based bank’s online efforts since the late 1990s. “We can accept check deposits from home office scanners, have reloadable credit cards and take the equivalent of signatures all the time.” Like rival Bank of America, whose nationwide footprint helps explain its larger number of online consumers (see Lance Drummond, No. 5), Wells introduced mobile banking last year. Recently, it allowed payments between the cell phones of Wells account holders. “All you need is their phone number,”

says Ostler.

4. Kevin Kometer

CIO, CME Group

Not ranked last year

The Chicago Mercantile Exchange’s Globex electronic trading platform got off to a slow start in 1992, meeting tremendous resistance from open-outcry traders. But now that it accounts for 85 percent of the derivatives exchange’s volume (9.5 million out of 11.2 million total contracts per day as of July), its revolutionary role in moving transactions online is beyond dispute. Kevin Kometer, a 14-year veteran of the CME and its CIO since June 30, has led much of the technological development and growth of Globex, which is being stretched not just by robust market activity but also by mergers. Over the past year Kometer’s team faced the massive challenge of integrating the Chicago Board of Trade’s systems and trading floors. “In January we migrated CBOT’s agricultural, equity index and interest rate contracts onto Globex, and it went — and continues to go — flawlessly,” says Kometer. Now he’s focusing on the $9.6 billion Nymex Holdings merger, completed August 22. Conveniently, Nymex already uses Globex, so “it will be largely a back-office clearing and regulatory integration effort,” notes Kometer, 44, who was promoted from deputy CIO when James Krause retired after 23 years with the CME. “We will continue to increase our capacity, scalability and performance,” he vows. “This is a nonstop project.”

5. Lance Drummond

Global Consumer and Small-Business Banking

E-Commerce/ATM Executive

Bank of America

Not ranked last year

Having 25 million online banking customers, more than any other bank in the world, wasn’t quite enough for Bank of America. In May 2007 the Charlotte, North Carolina–based banking giant moved on to mobile banking, offering account inquiries, bill payments and other services that by June of this year had attracted 1 million active customers — with as many as 100,000 of them logging in via handheld devices on peak days. “Six to 8 percent are new customers who never did business with us before,” says Lance Drummond, 53, a onetime Eastman Kodak Co. executive who joined BofA in 2002 and became head of global consumer and small-business banking e-commerce in mid-2007. The mobile service’s steady 10 percent monthly growth rate is a bright spot amid banking’s credit-crunch gloom, though Drummond says electronic banking is strong across the board. “Adding online, mobile and ATM, we have calculated that our customers make 3,400 touches per second, accounting for millions and millions of interactions a day,” he says. The bank is also spreading its wireless wealth by enabling merchants to send text messages alerting customers to sales and promotions.

6. Dan Mathisson

Head of Advanced Execution Services, Credit Suisse

Last year’s rank: 9

C redit Suisse isn’t the biggest algorithmic trading shop on the Street. That title — by acclamation because of the lack of reliable statistics — goes to Goldman, Sachs & Co., based on its status as the No. 1 prime brokerage. But according to market research and expert testimony, Credit Suisse surged to the forefront in algo technology in 2001, when Dan Mathisson joined from hedge fund firm D.E. Shaw & Co. and created the Advanced Execution Services unit. Eric Goldberg, CEO of trading software developer Portware, which works with AES, says Credit Suisse is not only “still ahead of the curve,” but also has a clear lead on the new algorithmic frontiers of futures and foreign exchange. The bank has augmented its software prowess with alternative trading systems — its Crossfinder has topped 170 million shares in average daily volume, and it owns interests in Boston-based LeveL ATS and pan-European Turquoise. Not resting on such laurels, Mathisson, 37, is pushing the envelope with what he calls transformational algorithms, which manage a client’s exposure across multiple products or asset classes, rather than individual securities. They will “change the way people trade,” he explains, “by buying something different than the customer is asking for and transforming it into what he wants.”

7. Seth Merrin

CEO and President, Liquidnet Holdings

Last year’s rank: 18

Seth Merrin had solidified his reputation as a financial technology entrepreneur well before he founded automated block-trading platform operator Liquidnet Holdings in 1999. His Merrin Financial invented the buy-side order management system circa 1985 and was sold to Automatic Data Processing in 1996. The next year he formed application software company VIE Systems, which New Era of Networks acquired in 1999. His third start-up was the real charm. Liquidnet grew out of his frustration at how stock exchanges had become more efficient and favorable for retail-size transactions than for large institutional trades. To Merrin, 47, the securities industry deserves an “appropriate market structure like that of any industry,” with a mix of wholesale and retail distribution. “No monopoly is ever good for the consumer,” he adds. His New York–based alternative trading system, which enables 500-plus member institutions to match orders among themselves, handled an average daily volume of 63 million shares last year. That was double the 2005 level, and the system has expanded to London and other major European and Asia-Pacific markets. Now Liquid­net is going transparent, having filed for an IPO on July 1, disclosing that it earned $115 million on $346 million of revenue last year.

8. Jeffrey Sprecher

Chairman and CEO, IntercontinentalExchange

Last year’s rank: 20

Jeffrey Sprecher has never been one to think small. Witness his acquisition of a regional power exchange in the late 1990s that became today’s multinational IntercontinentalExchange, and his unsolicited $10 billion takeover bid for the Chicago Board of Trade in 2007. The latter was trumped by the Chicago Mercantile Exchange’s friendly $12 billion offer, but just about everything else Sprecher has touched has turned to, well, black gold. Atlanta-based ICE went live as an online energy exchange in 2000. The following year it bought International Petroleum Exchange of London, now ICE Futures Europe, where the benchmark Brent and West Texas Intermediate crude oil contracts trade — all electronically, since the floor closed in 2005. “We decided to step back and look at finding markets that are moving from analog — the telephone — to digital,” explains Sprecher, 53. Last year ICE acquired the New York Board of Trade for $1 billion. In March, ICE bought New York–based trading systems developer YellowJacket Software, and in August it purchased New York’s Creditex Group (see Sunil Hirani, No. 34) as an entrée into credit derivatives. “A year ago we were an energy exchange; now we have Russell indexes, credit and OTC options,” says Sprecher. “We are positioning ourselves to provide the data and tools” to address the continuing regulatory pressures for transparency in OTC markets.

9. Paul Galant

CEO, Global Transaction Services, Citigroup

Not ranked last year

Citigroup has long been regarded as the banking industry’s biggest investor in technology, an innovator in everything from automated teller machines to corporate cash management systems. But does the New York–based behemoth get a bottom-line return? Look no further than the global transaction services unit, which is “a technology company with a banking license,” according to its CEO, Paul Galant. He oversees 25,000 employees in 141 countries and $1 billion a year in technology spending — only a handful of financial companies match that sum companywide — to serve the transaction processing needs of corporations, governments, financial institutions and securities markets using a variety of Internet, mobile and other telecommunications utilities. In the first half of 2008, when Citi as a whole lost $7.6 billion, GTS increased net income 49 percent year-over-year, to $1.4 billion, on $4.7 billion in revenue. Galant, 40, a Donaldson, Lufkin & Jenrette veteran who joined Citi in 2002, points to a recently launched foreign exchange settlement service in Colombia as an example of Citi’s unique ability to combine global reach and local market expertise. “People think of technology as writing code, but that’s the last thing we do,” he says. “Creativity comes from understanding business needs. We sit around the table with the smartest clients in the world to understand their problems and capture opportunities.”

10. Lance Uggla

CEO, Markit Group

Last year’s rank: 28

Recent upheavals in financial markets, and particularly the volatility in over-the-counter credit derivatives, have been very, very good for Markit Group. The New York– and London-based company that Lance Uggla, 46, founded within Canada’s TD Bank Financial Group in 2001 and spun out in 2003, has consolidated its hold on the business of valuing — and thereby promoting the transparency and liquidity of — hard-to-price securities. Now with 16 shareholder banks, Markit is also playing key industry-utility roles as an administrator of indexes — in November 2007 it acquired International Index Co. and CDS IndexCo, two entities instrumental in promoting credit derivatives trading — and as a posttrade processor of credit default swaps. Uggla has relentlessly expanded the company through acquisitions, including the European trade reporting system BOAT in January, derivatives platform SwapsWire in May and syndicated loan software company JPMorgan FCS Corp., on September 4. He formed alliances this year with brokerage Creditex Group (see Sunil Hirani, No. 34) and Depository Trust & Clearing Corp. (see Peter Axilrod, No. 17) to help address regulators’ concerns about OTC processing backlogs. “We have added more than 40 buy-side clients to our trade-processing platform this year, and we have beaten our monthly record of trades sent to DTCC for confirmation,” says Uggla.

11. Stephen Scullen III

President, Fidelity Web Technology Group

Not ranked last year

The recent retirement of longtime Fidelity Investments technology guru Steven Elterich (No. 4 last year), who developed the Boston-based firm’s Internet strategy in the 1990s and managed key online brokerage, institutional and retirement services initiatives since, set off some recruiting from outside. In July, Fidelity named Morgan Stanley co–global chief information officer Daniel Petrozzo as its new CIO, and Merrill Lynch Wealth Management CTO Ronald DePoalo came in as CIO of Fidelity Institutional Products Group. Amid the reshuffling, Stephen Scullen III represented continuity. Since 1999, Scullen, 54, has been responsible for Fidelity’s customer Web sites, for five years as executive vice president of Fidelity eBusiness, which was Elterich’s brainchild, and since 2004 as head of the Web technology group. Having witnessed how everyone from active traders to 401(k) participants has ratcheted up their online service expectations over the years, Scullen believes that the Internet is on the cusp of another wave of growth and innovation for which Fidelity must be prepared. That means advanced animation and graphics and allowing customers to create personalized pages. “We want to serve up our features and functions on the customer’s terms,” Scullen says. “It’s like video games. People learn by playing. We’re taking that approach.”

12. Joe Ratterman

CEO, BATS Trading

Not ranked last year

Since its inception in 2005 as an electronic communications network challenging the major stock exchanges, BATS Trading has garnered, as of July, a 10.1 percent share of U.S. equities volume, or 1.125 billion shares per day. Now the Kansas City, Missouri–based upstart is going international. “We saw in Europe a large amount of market share being handled by incumbents who didn’t have the same technological capabilities as we had, and so we saw an opening,” says Joe Ratterman, 42, who took over as CEO in mid-2007 from his BATS co-founder, David Cummings. (No. 13 last year, Cummings rejoined another of his companies, automated market maker Tradebot Systems.) “We should be ready to go live in the fall,” says Ratterman, who contends that BATS’s young technology — built for speed of execution — provides “a huge advantage over those who have had to bring forward technology from the ’80s or ’90s.” It’s on view at Yahoo! Finance, which relies on BATS for real-time quotes (see Mark Interrante, No. 13). “We have new solutions, and we treat our platform as a daily science project on how to create the fastest, lightest and easiest-to-maintain engine,” says Ratterman.

13. Mark Interrante

Vice President and General Manager, Yahoo! Finance

Not ranked last year

Yahoo! Finance has more unique visitors than does any rival financial portal: 37 million monthly from 22 countries, 19.5 million of them in the U.S. The trick is to keep them loyal and attract more in the face of intense competition from the likes of Google, Microsoft Corp.’s MSN and News Corp., which owns the Wall Street Journal and Fox News. A recent deal with BATS Trading (see Joe Ratterman, No. 12) to display free real-time stock quotes is an example of how Yahoo! Finance general manager Mark Interrante, 46, wants to keep raising the ante in terms of both information and sophistication. Real-time market data, now including an “order book” view that shows the last five bids and asks, is “among the most user-requested features,” says Interrante, an engineering team leader who stepped into the general manager job 15 months ago when Peggy White (No. 8 last year) left the company. He also believes in “small innovations rather than repainting the whole site,” such as a tool for finding quotes without having to enter the stock symbol. The portal aggregates content from more than 100 video and news providers, including Forbes, Fortune, BusinessWeek, CNBC and CNN, and market data from more than 50 exchanges.

14. Gary Katz

President and CEO, International Securities Exchange

Not ranked last year

A co-founder with David Krell (No. 11 last year) of New York’s International Securities Exchange, which in May 2000 opened the first all-electronic options market in the U.S., Gary Katz rose from COO to CEO in January when Krell became nonexecutive chairman. That followed the December 20 completion of the $2.8 billion acquisition of ISE by Deutsche Börse subsidiary Eurex, which created a formidable trans­atlantic derivatives force. Katz, 47, who was instrumental in creating ISE’s electronic-auction structure, and who announced last month that the ISE Stock Exchange is joining forces with the Direct Edge electronic communications network, says he is leaving technology development to others as he focuses on other strategic and merger-releated opportunities. “Great synergies can be gained by using one system for multiple asset classes and geographies,” says Katz. “The platform doesn’t have to be re-created each time we add something new.” Eyeing significant non-U.S. demand for ISE products, he says, “We are creating the first modern transatlantic link to enable us to list this liquidity outside the U.S.” That link is expected to be in place in the second half of 2009, and a single options platform for ISE, Eurex and Deutsche Börse is slated for 2011.

15. Joseph Antonellis

Vice Chairman, State Street Corp.

Not ranked last year

State Street Corp. became an e-finance trailblazer in 1996 by launching Global Link, the institutional research and trading network that includes the FX Connect foreign exchange platform. But Global Link, headed by Simon Wilson-

Taylor (No. 29 last year), is just one example of how pervasive information technology has become across all of the Boston-based asset manager and servicer’s business lines. It’s so critical that the company’s vice chairman, 53-year-old Joseph Antonellis, is the head of global IT, which State Street says accounts for more than 4,000 of its 27,000 employees and 20 to 25 percent of its operating budget. Antonellis, who left Bank of Boston Corp. in 1991 to join State Street’s mutual fund services business and has presided over IT since 2003, says many of today’s priorities revolve around alternative investments, which he calls “our No. 1 emphasis and No. 1 in our growth.” In June, State Street united three hedge fund and private equity servicing businesses it had acquired since 2002 under the State Street Alternative Investment Solutions banner. Responding to explosive growth in over-the-counter derivatives, “we have built an end-to-end solution” for processing and reporting and have been “working with the industry on standardization,” adds Antonellis, whose other responsibilities include North American investor services and global securities services.

16. Tom Miglis

Chief Information Officer, Citadel Investment Group

Not ranked last year

A veteran technologist from Bankers Trust Co. and Salomon Brothers who joined Chicago-based hedge fund Citadel Investment Group in 2001, Tom Miglis likes to say, “We’re driven to do the impossible.” Renowned for its market-

making prowess — giving it more public visibility than many hedge funds seek — as well as its quantitative trading, $20 billion-in-assets Citadel keeps strategic details close to the vest. But it clearly spends enough to control its tech destiny, given that “more than 99 percent of transactions flow through Citadel-built applications,” CIO Miglis, 54, reveals. To get the most bang for the buck, Citadel refreshes older technology as much as possible. Miglis sees to it that a system built for, say, equities, is adapted for fixed income as well. “We don’t take a patchwork approach,” he says. “We focus on what we need to get the job done, and we don’t hesitate to go back and rebuild if something is not right.” Recent developments include proprietary systems for energy and fixed-income trading that were previously vendor-supplied. Citadel is now offering administration services to rival funds, an example of how it “uses technology to create new business opportunities and significantly improve the processes of our existing businesses,” says Miglis.

17. Peter Axilrod

Managing Director/Business Development, Depository Trust & Clearing Corp.

Last year’s rank: 15

The 2007 credit crunch sent over-the-counter derivatives volumes into the stratosphere and rekindled regulators’ concerns about the risks posed by trillions of notional-value dollars’ worth of unprocessed credit default swaps. Fortunately, by that time most such contracts had already been recorded and stored electronically in the Depository Trust & Clearing Corp.’s Trade Information Warehouse, which a team overseen by DTCC managing director Peter Axilrod launched in 2006 to replicate the automated depository services that keep equity and bond markets running smoothly. The CDS flows, still doubling year-over-year, are hardly glitch-free. Yet considerable risk has been wrung out of the system: More than 90 percent of credit derivatives trades are now confirmed on DTCC’s online Deriv/SERV platform, which has 1,100 clients and supplies trade details to the warehouse, and hundreds of thousands of bilateral interdealer transactions are consolidated into a few hundred each quarter. “The regulatory environment tends to focus on life-cycle event processing,” says Axilrod, 54, who joined New York–based DTCC in 2000 from Fidelity Investments. “A large part of our effort is to take the risk and inefficiencies in life-cycle events out of the processes.”

18. James Toffey

CEO, Tradeweb

Last year’s rank: 19

James Toffey came out of Credit Suisse First Boston to launch the Tradeweb electronic fixed-income trading platform in 1998 and sold it to Canada’s Thomson Corp. in 2004. A flurry of transactions this year has altered Tradeweb’s ownership yet again, while expanding the network’s product menu — it now operates 18 online marketplaces — and leaving Toffey, 47, firmly at the helm. In January nine leading dealers took a combined $180 million minority stake in Tradeweb and committed $100 million to such new businesses as interest rate and credit default swaps, of which they will own a majority. In April, Citigroup joined the dealer consortium and, as part of the Thomson–Reuters Group merger, Tradeweb dropped Thomson from its name and took on two of Thomson’s equity-related trading services, AutEx and the Thomson Order Routing Network, now the Tradeweb Routing Network. “We’re the first company to create an institutional trading platform across equities, fixed income and derivatives,” Toffey says. Trading volume in the first half jumped 40 percent year-over-year, to $42.7 trillion. Toffey sees a major growth opportunity in swaps, which he notes is “one of the last [markets] to go online.” In July, Tradeweb announced plans to introduce a U.S. covered bonds marketplace to support the Treasury-backed plan to provide alternative funding for the troubled mortgage market.

19. Paul Heller

CIO, Vanguard Group

Last year’s rank: 16

Corporations often struggle to get their information technology staff and businesspeople speaking the same language, but 24-year Vanguard Group veteran Paul Heller bridges that divide. Before becoming CIO of the Valley Forge, Pennsylvania–based mutual fund firm in 2006, Heller, 47, ran both its retail and institutional businesses. As he puts it, “We use technology to do three things: Deliver great performance over the long term, give customers great service, and try to do that at a great price.” Vanguard makes ten to 12 times the number of customer contacts online that it does over the phone. In fact, it attributes one third of its cost savings over the past five years to the Web. As a result, notes Heller, Vanguard’s site now looks more like a media company’s, with podcasts and personalized screens for retail and institutional clients. “Our Web site was dense with good stuff to read, but that was the old world,” says Heller, whose latest focus is adding features for buyers of exchange-traded funds and improving security. “Securing your Web site is nothing less than an arms race,” he says.

20. David Gershon

CEO, SuperDerivatives

Last year’s rank: 23

Under founder and CEO David Gershon, an Israel-born physicist who formerly headed exotic currency options at Barclays Capital in London, SuperDerivatives started out in 2000 developing a pricing tool for currency options that it touted as more accurate than the Black-Scholes model. Eight years on, after attracting a long list of international financial institutions and corporate clients and expanding its Web-based benchmarking services into equity, interest rate, commodity and credit derivatives, London- and New York–based SuperDerivatives renewed its focus on foreign exchange in June with an enhanced trading platform that spans more than 150 instrument types on more than 100 currency pairs. Gershon says that although many currency options have become highly commoditized, FX market participants need the flexibility to respond to a steady stream of new and complex exotic products. Gershon, 43, maintains that the first incarnation of SuperDerivatives brought unprecedented transparency to FX options and believes the new system “will further increase the volume of derivatives traded.” SuperDerivatives tools, by facilitating hedging across asset classes, “provide unparalleled coverage — currency exposures, fuel, wheat — so anyone using derivatives can find where they should trade and identify the fair price,” says Gershon.

21. Joe Moglia

CEO, TD Ameritrade Holding Corp.

Last year’s rank: 14

When Joe Moglia, a former Merrill Lynch & Co. institutional and private-client executive, became CEO of Omaha-based Ameritrade Holding Corp. in 2001, it was four years past its IPO and, though two decades old and appropriately Internet-focused, still very much the discount brokerage founded by its billionaire chairman, J. Joe Ricketts, who is the father of Thomas Ricketts, (No. 39). Moglia, 58, sought growth through acquisitions, most notably the purchases of Datek Online Holdings Corp. in 2002 and TD Waterhouse in 2006. Those deals gave what is now TD Ameritrade the heft to overtake e-brokerage stalwarts Charles Schwab Corp. and E*Trade Financial Corp. in average daily online trades; that figure grew 22 percent year-over-year in the June quarter, to 298,000. The February purchase of Fiserv Investment Support Services, which has 500 investment advisers, brought TD Ameritrade’s institutional adviser network up to 4,500. Though he took a pass on buying the weakened E*Trade, Moglia says he “wouldn’t hesitate to pursue” more mergers. Fueled by the TD Waterhouse integration, net new client assets doubled in the nine months through June, to $20 billion, indicating that “our asset-gathering strategy continues to generate traction,” says Moglia. In October he will become chairman, yielding the CEO post to COO Fredric Tomczyk.

22. Kenneth Schiciano

Managing Director,

TA Associates

Last year’s rank: 24

As head of the financial technology practice at Boston-based private equity firm TA Associates, managing director Kenneth Schiciano oversees one of the biggest portfolios in the field. The current $1.5 billion portfolio — TA manages $12 billion overall in 380 companies and has invested more than $3 billion in financial services and financial technology over its 40-year history — includes securities lending platform eSecLending and credit derivatives brokerage Creditex Group (see Sunil Hirani, No. 34), which has been acquired by former TA holding Intercontinental­Exchange (see Jeffrey Sprecher, No. 8). Schiciano, 45, has also exited from such e-finance investments as Ameritrade Holding Corp. and SmartStream Technologies. In January he led TA’s minority investment in RGM Advisors, an automated multi-asset-class trading firm based in Austin, Texas. The 20-year TA veteran, as a board member of ION Trading, also had a hand in four acquisitions or investments by the Dublin-based trading technology supplier since TA acquired its ION stake in 2004. “We are looking at ways to consolidate a fragmented industry,” says Schiciano. “We believe that dealers would rather purchase integrated high-performance trading solutions from fewer vendors that have proven they can reliably deliver and support core systems.”

23. Jeff Maggioncalda

President and CEO, Financial Engines

Last year’s rank: 17

The Pension Protection Act of 2006 may have cemented the 401(k) plan’s status as the cornerstone of U.S. retirement finance, but to Jeff Maggioncalda, president and CEO of Financial Engines, it also heralded the end of go-it-alone 401(k) investing. “As a result of the PPA, many companies have realized that for the 401(k) plan to work, people need to be helped,” says Maggioncalda, 39, who has worked at Financial Engines since Nobel Prize–winning economist William Sharpe founded it in 1996 to bring retirement planning to the masses via the Internet. “We’re therefore moving into an era where things are taken care of for individuals and they get the help they need,” he adds. That’s good news for Financial Engines. Last year the Palo Alto, California, company doubled assets under management, to $16 billion, and had more than 225,000 401(k) plan participants. Its low-cost platform is what sets Financial Engines apart from other online advisers, Maggioncalda says. “Large companies want to make sure that all their employees get help, and while this raises the bar on how cost-effective you have to be, it also offers the benefit of being able to reach out to folks, make yourself known and tie yourself to the existing 401(k) proposition.”

24. Howard Lutnick

Chairman and Co-CEO BGC Partners

Last year’s rank: 25

In 1996, Howard Lutnick, CEO of Cantor Fitzgerald, developed an automated trading system that became the nucleus of eSpeed, a technology company that Cantor spun off in an IPO in 1999 and that is now part of BGC Partners. He has been saying all along that the high-performance, multiple-asset-class technology is “bought and paid for” — and waiting for sales and profit margins to pile up as global fixed-income, currency and derivative markets evolve electronically. In the meantime, eSpeed and Lutnick have accumulated a portfolio of patents, some encountering court challenges, to protect their inventions. After the September 11, 2001, terrorist attacks tragically decimated the Cantor staff based in New York’s World Trade Center, eSpeed proved its mettle by sustaining U.S. Treasuries trading. But the company eventually lost its interdealer brokerage lead to ICAP (see David Rutter, No. 26). This year Lutnick, 46, did some reengineering, merging eSpeed with BGC, Cantor’s four-year-old voice brokerage spin-off. He attributes the second quarter’s 70 percent earnings growth, to $32 million, in part to the bought-and-paid-for technology, noting that “we saw more electronic volume in credit default swaps and FX options in the second quarter than in all of 2007.” He expects a longer-term payback on the patents: Their value could turn out to be “in partnerships as opposed to litigation.”

25. Thomas Peterffy

Chairman and CEO Interactive Brokers Group

Last year’s rank: 30

From the time he started work as an American Stock Exchange options market maker in 1977, Thomas Peterffy, trained as a computer programmer, has regarded it as inevitable that securities markets would go all-electronic — and wondered why it was taking so long. “We’re still only halfway there,” he says. “Half the people are still trading by telephone.” Peterffy followed his ahead-of-the-times instincts and founded Interactive Brokers Group (originally Timber Hill Group) in 1982. Today half the Greenwich, Connecticut–based e-brokerage’s 700-plus employees work on the technology that gives investors low-cost access to securities, foreign exchange and commodities markets in multiple languages and currencies through a single account. “We are basically a software shop,” says Peterffy, 64. “To be successful at anything, you have to love it, and we love software.” Interactive Brokers, which raised $1.2 billion in a May 2007 IPO, increased its second-quarter net revenues 34 percent, to $395 million, and earnings per share 57 percent, to 44 cents. “We are connected to 83 exchanges and will have several more by year-end,” boasts Peterffy, whose engineers are now rolling out an institutional order management system for automated staging and execution of all products and order types, even by traders in remote locations.

26. David Rutter

Deputy CEO, ICAP

Electronic Broking

Last year’s rank: 31

London-based interdealer brokerage ICAP has spent much of this decade tilting toward electronic trading. It punctuated its transformation with such high-profile acquisitions as that of fixed-income platform BrokerTec Global in 2003, for $289 million, and spot foreign exchange platform EBS in 2006, for $775 million, both from bank-consortium owners. With these systems now operating on 6,000 workstations on 2,500 dealing floors in 50 countries, ICAP is closing in on its goal of getting half of its operating profit this year from e-trading, notes David Rutter, Jersey City, New Jersey–based deputy CEO of ICAP Electronic Broking. “The key to increasing both profits and market share is increasing our product offerings and capitalizing on opportunities in new geographies,” says Rutter, 45, who has been in his current position for four years, overseeing BrokerTec, EBS and other product extensions. “A lot of growth is coming from emerging-markets countries, and it is very important that we continue to build a global footprint,” he adds. ICAP now offers trading in 30 financial products or instruments, up from 20 a year ago. In August it introduced Internet access to EBS “to reach participants we may not have been able to reach before,” says Rutter. Average daily electronic broking volumes jumped 24 percent in the 12 months through June, to $854.5 billion.

27. James Hale III and Robert Huret

Founding Partners, FTVentures

Last year’s rank: 33

Technology investing and market volatility can be an anxiety-inducing brew, but for James Hale III and Robert Huret, they’re a livelihood. “You just have to have some perspective,” says Huret, 63, who with Hale, 56, celebrated on July 31 the tenth anniversary of FTVentures, their San Francisco–based partnership that channels money from major financial institutions into emerging technology companies that can serve those institutions. Having witnessed, by his count, 12 credit crises over a 40-year financial industry career, Huret acknowledges that the current downturn may be worse than the others. “It’s hard not to be depressed,” he admits, “but we can also say it won’t be that bad.” The pair’s more than 50 limited partners agree: FTVentures closed its third fund in April. At $512 million, it brought the 36-person firm’s total committed capital to $1.1 billion. Today’s market requires discipline: “Nice-to-haves” don’t cut it, but “gotta-haves” in areas such as compliance, data security and outsourcing get funded, says Hale, a 30-year industry veteran who worked with Huret at Montgomery Securities before they founded FTVentures. The firm’s investments this year include Aveksa, a Waltham, Massachusetts–based access control and compliance automation company, and PSS Systems, a Silicon Valley data-management and legal-discovery software provider.

28. Philip Weisberg

CEO, FX Alliance

Last year’s rank: 38

Like MarketAxess Holdings (see Richard McVey, No. 37), New York–based foreign exchange trading network FX Alliance was incubated within JPMorgan Chase & Co.’s LabMorgan, and CEO Philip Weisberg has been at the helm since FXall’s inception, in May 2001. Both are also portfolio holdings of Palo Alto, California–based Technology Crossover Ventures. Last year, says Weisberg, 40, “pretty much everything” in the currency market was volatile, and algorithmic trading “became more broadly accepted as a way to trade foreign exchange.” FXall was prepared. Accelor, its anonymous order-matching system for professional traders, such as those at banks and hedge funds, went live in February 2007, and FXall’s annual trading volume was $13.4 trillion, 37 percent more than it had been in 2006. In the first quarter the rise was 39 percent, to $4.1 trillion. “The professionals who were previously trading other asset classes like equities can now apply the same advances in technology and automation in the foreign exchange market,” says Weisberg. This year FXall started a white-label service that lets banks market their own branded versions to “clients who aren’t really big enough to use FXall,” he adds, calling it “a fantastic opportunity” to increase the number of participants in the electronic foreign exchange market.

29. Robert Gasser

CEO and President, Investment Technology Group

Not ranked last year

Investment Technology Group started out in a league of its own in 1987 as a spin-off of Jefferies Group with a marquee product, the Posit block-order crossing system. Today, ITG and Posit are hardly alone in institutional e-brokerage, so CEO and president Robert Gasser articulates the company’s strategy as “to innovate and differentiate in a crowded space.” Gasser, 43, who took over as CEO two years ago from ITG founder Raymond Killian, contends that the organization’s range of trading services and analytics, along with a neutral-agency execution approach that is “truly unconflicted” compared with other firms’ proprietary trading interests, constitute “a model that is right for the times.” For buy-side clients that are “more and more self-directed and empowered in their trading, we are the purest play possible,” adds Gasser, a former CEO of Nyfix and head of U.S. equity trading at JPMorgan Securities. ITG announced July 31 that it was taking full control of BlockAlert, a crossing service it launched jointly with Merrill Lynch & Co. in 2006. “Now we are very much in control of our destiny,” says Gasser, primarily taking aim at buy-side crossing rival Liquidnet Holdings (see Seth Merrin, No. 7).

30. David Blaszkowsky

Director of Interactive Disclosure, Securities and Exchange Commission

Not ranked last year

Since becoming Securities and Exchange Commission chairman in 2005, Christopher Cox has repeatedly mounted the bully pulpit to promote the extensible business reporting language, or XBRL, an audit- and analysis-friendly data-tagging standard that he has said will give any investor the “power at his or her fingertips to compare the financial results of six or 12 or 24 companies, probably for free, on just about any financial Web site.” Last October, Cox underscored his sense of urgency by naming Standard & Poor’s executive David Blaszkowsky as his XBRL point man, in charge of a newly established Office of Interactive Disclosure. In May the SEC voted unanimously to phase in mandatory XBRL regulatory filings starting next year, and Blaszkowsky, 46, was off and running, coordinating the efforts of other SEC divisions and reaching out to software providers, rating agencies and standards-setting organizations to prepare for the changeover. “We are not first in this,” he says, noting that China and Japan, among others, embraced XBRL more quickly. “Finally, we are witnessing the liberation of financial content from the page,” adds Blaszkowsky, a self-described “nerdy guy” with a University of Chicago economics degree who headed corporate markets and investor relations services at S&P. “Better information, better markets — it’s a win all around.”

31. Steven McLaughlin

Managing Partner, Financial Technology Partners

Last year’s rank: 34

Financial Technology Partners, a San Francisco boutique billed by managing partner Steven McLaughlin as “the only investment banking firm focused exclusively on the financial technology sector,” has been scouting out and winning dealmaking roles since the former Goldman, Sachs & Co. technology banker founded the firm in 2002. Now with a staff of 24, FT Partners advised Automated Trading Desk on its $680 million buyout by Citigroup in July 2007 and market-data technology company Wombat Financial Software on its $200 million sale to NYSE Euronext in March. It also advised TradingScreen on a $110 million recapitalization in September 2007 and MarketAxess on the sale of a $35 million stake in June — both investments led by Silicon Valley’s Technology Crossover Ventures. McLaughlin stresses the value of an independent perspective, noting that bulge-bracket banks’ ownership of interests in, or purchases of products from, high-tech start-ups could compromise their advice. “Whether you are in bed with Wall Street or competing with Wall Street, we are the great answer in financial technology,” asserts the 39-year-old. He says the NYSE’s purchase of Wombat — Merrill Lynch & Co. was a shareholder — indicates how exchanges are “more willing to compete with the sell side in the provisioning of technology to clients.”

32. Howard Edelstein

CEO, Nyfix

Not ranked last year

Howard Edelstein has left his mark on the securities industry infrastructure as founder and CEO of Thomson Financial ESG, a predecessor of the Omgeo trade communications utility, from 1993 to 2001; as president and CEO of the Radianz telecommunications network from 2003 to 2005; and before and after the latter gig as an entrepreneur-in-residence at private equity firm Warburg Pincus. When Warburg announced in September 2006 that it was investing $75 million for a one-third interest in ailing executing brokerage Nyfix, it installed Edelstein as CEO. Succeeding managers such as Robert Gasser (see No. 29), Edelstein says he spent much of last year rectifying an options-backdating problem that required earnings restatements and cost the New York–based company its Nasdaq listing for two years. Now refocused on such core businesses as the Millennium trading platform, a dark-pool partnership with SWX Swiss Exchange’s SWX Europe and the recently acquired FixCity liquidity discovery technology, Edelstein has boosted the workforce by 25 percent, to more than 300, and delivered a 19 percent gross profit increase in the first half, to $32.3 million. Market fragmentation and lack of standardization “speak to the need for our aggregation and execution solutions,” he says.

33. Craig Saint-Amour

Industry Solutions Director for Capital Markets, Microsoft Corp.

Last year’s rank: 32

Microsoft Corp. approaches its business with the capital markets sector not as a seller of technology per se but as a partner with a diverse network — an “ecosystem” — of more than 100 other suppliers. “Each partner handles a piece of the trade life cycle,” says Craig Saint-Amour, 55, the main man on Wall Street for Redmond, Washington–based Microsoft Corp. These applications “extend the functionality of existing pieces of Microsoft technology at clients’ shops.” Cases in point: Citigroup’s New York–based Lava Trading division, which deals with 8 billion streaming data bits a day using the SQL Server database management system; and partner vendors like Mountain View, California–based Coral8 and Lexington, Massachusetts–based StreamBase Systems, which supply complex event-processing components for algorithmic trading systems. To monitor industry needs, Microsoft conducts surveys. One in May and June found growing demand for risk analytics, and, for 25 percent of 103 capital markets executives, risk data in real time. The strategic response, says Saint-Amour, is to “make solutions scalable, add business intelligence and data mining tools and invest in research — Microsoft has committed $40 billion over the next five years — to yield innovation.”

34. Sunil Hirani

Chairman and CEO, Creditex Group

Not ranked last year

Sunil Hirani combined his computer science background — he earned a BS in that subject from Washington University in St. Louis — with five years’ experience in the 1990s as part of Deutsche Bank’s pacesetting over-the-counter derivatives team to establish Creditex Group, which has become a key intermediary in the burgeoning credit derivatives market. CEO Hirani, 41, got Wall Street backing to launch Creditex in 1999 with offices in New York and London. The company has grown along with credit default swaps volumes, which have been doubling annually since 2000 and reached $62 trillion in notional value at year-end 2007. Hirani has added some juice of his own, with a string of infrastructure-enhancing initiatives, including the 2005 formation of CDS affirmation subsidiary T-Zero; the 2006 acquisition of London-based CreditTrade, which strengthened Creditex’s voice-electronic hybrid brokerage approach; and the 2007 introduction of the Q-WIXX electronic platform for trading large CDS portfolios. He made the ultimate deal last month, selling Creditex to Atlanta-based Intercontinental­Exchange (see Jeffrey Sprecher, No. 8) for $513 million. Hirani says Creditex and ICE have a “complementary ability” to help dealer clients as they face “greater capital constraints, regulatory scrutiny, processing challenges and heightened focus on counterparty credit risk.”

35. David Eisner

CEO, TheMarkets.com

Last year’s rank: 36

TheMarkets.com, formed in 2000 by 11 top investment banks to distribute securities research directly to clients, reports that its revenues grew 55 percent in 2007 and quadrupled over a three-year period. For CEO David Eisner, a former Jefferies Group executive who has run the venture since the start, the returns to the owners — technology partner Thomson Reuters now among them — are also measured in time. “Clients tell us that on average they save two to three hours a week in chasing down valuable content through our service,” Eisner, 50, says. Reaching 2,100 institutions in 46 countries, up from 1,600 firms in 43 countries as of early 2007, TheMarkets.com provides software that “allows institutional investors to vote on the brokers and services they find useful in a simple way, and thus allocate funds more effectively” as they address regulatory and internal concerns about how commissions are apportioned, notes Eisner. In July, TheMarkets.com formed a contributor relations and operations division, creating teams in New York and London to develop relationships with brokers and independent research providers outside the company’s ownership group.

36. Karen Maguire

President and CEO

Satuit Technologies

Not ranked last year

In 2003 software as a service, or SaaS, wasn’t the rage that it is today as a way for technology companies to deliver their applications to clients over an Internet connection. Satuit Technologies, then with five years under its belt as a provider of sales automation and customer relationship management systems to the financial and energy sectors, adopted SaaS at that early stage, and the response among its more than 140 investment management industry clients is a testament to its foresight. “We put on a couple of clients when we first dipped our toes in; now it’s rare for anyone to want the traditional method” of installing the software in-house, says CEO Karen Maguire, a veteran of Bank of Boston’s institutional investment division Dewey Square Investors, who co-founded Satuit as a consulting firm in 1994. From offices in Norwell, Massachusetts, and London, Satuit’s 37 employees serve such firms as Great Lakes Advisors, Manulife Financial, Munder Capital Management and a growing number of hedge and private equity funds. Maguire sees a hot trend in mobile access, and in addition to BlackBerry, Satuit has integrated its system with the Apple iPhone because “there is definite demand from people who have iPhones for personal use.”

37. Richard McVey

Chairman and CEO, MarketAxess Holdings

Not ranked last year

Richard McVey, 49, chairman and CEO of MarketAxess Holdings, says, “The credit crisis runs deep and broad.” His electronic trading platform for 30 broker-dealers and 674 clients has been at the mercy of credit cycles, particularly as they affect corporate bonds. Commissions on U.S. and European high-grade corporates, which provide the majority of revenues, fell 7 percent in the second quarter, to $17.7 million, for MarketAxess, the smaller, publicly traded fixed-income rival of Thomson Reuters affiliate Tradeweb (see James Toffey, No. 18). But MarketAxess handlesotherassetclasses— emerging-markets bonds, agency securities and credit default swaps — and has diversified into data and technology products. Strong gains in those areas allowed the company to eke out a 1.3 percent revenue increase in the quarter, to a record $25.6 million. The performance was bolstered in July by the completion of the sale of 9 percent of MarketAxess to Technology Crossover Ventures for $35 million. McVey has also been busy on the acquisition front. On top of the purchase last November of Midvale, Utah–based trading software company Trade West Systems for undisclosed terms, MarketAxess paid $42 million in March for Greenline Financial Technologies, a Chicago firm that McVey says will “provide messaging and connectivity services to our clients.”

38. Todd Christy

President and CTO, Pyxis Mobile

Not ranked last year

Ten years ago, when former Accenture consultants Todd Christy and Shane Hughes formed Pyxis Mobile, handheld computers were exotic gadgets. In 2001 the Waltham, Massachusetts, company produced its first wireless software for buy-side firms. Today mobile access is mainstream; more than 200 financial companies, including 28 of the 50 biggest global asset managers, use Pyxis applications for customer relationship management, portfolio management, trading and compliance. Pyxis’ priorities parallel those of any technology provider or user dealing with floods of financial information, says Christy, 38. “Independent agents, advisers and interdealer brokers require more real-time access to proprietary data, for both reading and writing,” he notes. “We focused on that from day one.” Pyxis has taken some big steps this year, releasing version 6.0 of its platform, signing a distribution deal with AT&T and appointing former Fidelity Brokerage Services president Robert Mazzarella chairman and CEO in place of Hughes, who has stepped into an advisory role. Coming next, says Christy, are “broader initiatives [that] include more transactional capabilities” and “more richness” of data to be delivered on the Apple iPhone and BlackBerry Bold.

39. Thomas Ricketts

President and CEO, Incapital

Not ranked last year

At ABN Amro Bank in Chicago in the late 1990s, Thomas Ricketts developed Direct Access Notes, an online platform that allows corporations to sell bonds to individual investors. In 2000, Ricketts set off on his own, founding Incapital and a competing platform, InterNotes. Dependent on a favorable yield curve, Incapital has suffered through some dry spells. CEO Ricketts rode them out by extending his network to Europe and Asia and diversifying into structured products, of which Incapital has distributed more than $1 billion worth this year through August, matching 2007’s pace. As underwriter for the likes of Bank of America Corp., GE Capital Corp. and DaimlerChrysler, and thanks to the merger Ricketts completed in March with his former DAN business, then managed by BofA’s LaSalle division, “we have 70 percent of the market for retail corporates,” he boasts. As of mid-August the 2008 corporate volume of $13 billion was almost double the $6.8 billion for full-year 2007. The firm also underwrote $3 billion in agency securities through August. Ricketts, 42, credits Incapital’s technology with “systematizing the process” for issuers and broker-dealers and enabling the firm to scale up and add products. “It gave us a competitive advantage and raised barriers to entry by others,” he adds.

40. Peter Crosbie

CEO, BondDesk Group

Not ranked last year

Two years ago Boston-based private equity firm Advent International Corp. placed a bet on fixed income by buying retail bond-distribution platform BondDesk Group from the investment banks that owned it. Last October it appointed Peter Crosbie, 48, CEO and elevated Robert Slaymaker (No. 37 last year) to chairman. The moves are paying off to the extent that “our volumes go up when the retail market is successful,” says Crosbie, formerly CEO of risk analytics supplier Moody’s KMV. “Our customers have been selling more fixed-income securities.” The BondDesk alternative trading system, which connects more than 2,000 brokers to 35,000 live and executable securities from 120 dealers, is handling an average 25,000 transactions a day, 5,000 more than when Crosbie was hired. The Mill Valley, California–based company extends its reach as a vendor of quantitative and analytical software through subsidiaries TechHackers and TIPS. BondDesk sells an execution engine that lets firms customize or private-label their offerings to individual investors. “Our clients all do the same thing but in different ways, and we try and accommodate that,” says Crosbie. “You wouldn’t see this level of service on an institutional platform.”

The Online Finance 40 was compiled under the direction of U.S. Editor Jeffrey Kutler. Individual profiles were written by Kutler, Janice Fioravante, Savita Iyer, Xiang Ji, Maureen Nevin Duffy, Julie Segal, Rosalyn Retkwa and Melanie Wold.