The big brother gets bigger...
Following the big money
By James Christie
Redherring.com, September 18, 2000
The Securities and Exchange Commission is pressuring investment houses to give small investors corporate financial information at the same time they hand it to analysts. But you can bet the big players on Wall Street will still get more information than Joe Investor.
After all, the financial services industry pays big bucks for it. And money matters. The more you're willing to spend, the more you can demand.
It's a point taken as a given by the backers of TheMarkets.com, a forthcoming Web site for institutional investors. "The guy who buys 1,000 servers from Cisco gets different service from the guy who buys two servers from Cisco," notes Tom Joyce, co-head of global electronic equity trading at Merrill Lynch (NYSE: MER), a partner in TheMarkets.com. The other players in the site include Goldman Sachs (NYSE: GS), Morgan Stanley Dean Witter (Nasdaq: MWD), Salomon Smith Barney, Credit Suisse First Boston (CSFB), UBS Warburg (NYSE: UBS), and Deutsche Bank Alex. Brown.
Servicing research needs is what TheMarkets.com, backed by seven huge investment houses, will be based on, because institutional investors have monster appetites for research. It's a major reason why investment firms crank out tomes filled with minutiae on companies and industries.
According to its backers, the Web site will be a one-stop research shop for institutional investors. "It's about turning a very cluttered world into a filtered, uncluttered world," says Duncan Niederauer, co-head of equities e-commerce at Goldman Sachs.
GLOBAL PLAYER
Actually, there's a bigger motive for TheMarkets.com than simply providing a value-added service to high-roller investors: stock markets keep growing in importance, and the business generated by institutional investors worldwide keeps growing.
The partners behind TheMarkets.com say they won't limit their Web site to domestic investors. Institutional players overseas also are a target market. TheMarkets.com aims to herd institutional investors in the U.S. and abroad online, wow them with content, and then link them to trading accounts at the respective Web sites of its partners.
"The intent of this is to be global day one," says Don Callahan, a managing director with the equity.com e-commerce unit at Morgan Stanley Dean Witter. "We intend to have as much multi-lingual support as we can within the next three months."
HEADED ONLINE
TheMarkets.com's investors also want an online presence because they expect institutional investors to follow individual investors away from their PCs.
According to Mr. Callahan, the institutional side of equity markets has to get ahead of broadband and wireless curves, so TheMarkets.com will allow institutional investors to set up personalized accounts accessed via wireless devices.
The Web site's investors expect reams and stacks of research reports to give way to easily accessible and managed research over the Web from anywhere, not just a trading desk. That's expected to make clients more "productive," says an executive involved with TheMarkets.com -- another way of saying clients will trade more often.
NUTS AND BOLTS
The way TheMarkets.com, scheduled to launch by year's end, will work is simple. That's something institutional investors demanded, according to the Web site's investors.
First, an investor affiliated with one of the Web site's partners signs on and customizes his or her account, which can be further customized later. Then the investor can select from a broad range of research, which "will be as real-time as our normal delivery is now" and linked to partners' Web sites, says Goldman Sachs' Mr. Niederauer.
TheMarkets.com's backers won't disclose how much money they're putting into the Web site. But they do see it as a long-term commitment: "This is an ongoing venture," says Bill Harts, managing director of the global equity e- |
