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To: TFF who wrote (11586)	12/21/2005 2:47:42 PM
From: TFF	Read Replies (1) \| Respond to of 12617

Lehman Acquires Townsend Analytics By Alexa Jaworski, Markets Reporter December 20, 2005 - Lehman Brothers Holdings said today that it is has acquired Townsend Analytics--a deal that makes Lehman the latest Wall Street bank to buy an independent brokerage-technology platform with a strong customer base in place. The transaction's value was not disclosed. Like others that have gone this route in the past couple of years--Citigroup with its acquisition of Lava Trading, Bank of New York with Sonic Trading, and JP Morgan Chase & Co. with Neovest--Lehman is underscoring its commitment to the "broker-neutrality" of the acquired technology while claiming a strategic advantage for itself. The purchase "significantly enhances our franchise and demonstrates our commitment to delivering state-of-the-art electronic trading capabilities to our clients worldwide," said Bart McDade, Lehman's global head of equities. Townsend's customer base speaks to its high standing in brokerage technology: Among the most recent to announce adoption of RealTick for global, multi-asset-class execution needs were UBS Investment Bank and Man Financial (Securities Industry News, Oct. 10). "Townsend Analytics provides Lehman Brothers with the highest quality and most extensive multi-broker, multi-asset-class execution management technology available from one vendor today," said Jeffrey S. Wecker, who as Lehman's managing director and global head of electronic client services is the bulge-bracket firm's architect of trading technology strategy. "The RealTick platform includes many services that will enhance the execution experience for our institutional, hedge fund, investment adviser, prime broker and clearing services clients." On the broker-neutrality issue, Wecker said: "Lehman Brothers values RealTick's status as an established, multi-broker platform. We are committed to preserving RealTick's broker-neutral platform, and we have established policies and procedures to protect the data, trades and confidentiality that RealTick affords end users and broker-dealers using the system." He noted that Lehman's ownership will not affect Townsend's distribution or customer service approach. RealTick will continue to be distributed through many broker-dealers, and end users will continue to be able to freely route their trades to the broker-dealers and execution venues they choose, he said. Chicago-based Townsend, best known for the RealTick direct market access (DMA) trading systems that have made major institutional inroads in recent years, initially made its mark with innovations in derivatives market technologies in the 1980s. It built on those advances in the 1990s, servicing the boom in day trading and developing the core technology of the Archipelago electronic communications network, now a full-fledged electronic exchange being acquired by the New York Stock Exchange. In the current decade, Townsend has ridden the wave of algorithmic trading and responded to demands for multi-currency, cross-asset-class investment strategies. In a statement, Lehman Brothers said that "the success of Townsend Analytics and its marquee product, RealTick, has been predicated on its ability to provide a global, multi-broker, multi-asset, client-facing trading platform. The firm recognizes the value of the breadth and depth of the RealTick platform and is fully committed to preserving broker-neutrality." Lehman has lately been posting some of the most impressive earnings on Wall Street--last week it said net income was up 38 percent in fiscal 2005 on a 26 percent net revenue gain--while being at or near the top in research and trading rankings and awards from the likes of Institutional Investor and Global Custodian magazines. Stuart and MarrGwen Townsend, the husband-and-wife team who co-founded Townsend in 1985, stated that they are "confident that our partnership with Lehman Brothers will preserve this platform. Lehman Brothers' expertise in capital markets, coupled with its unwavering commitment to providing the most sophisticated execution solutions to its clients worldwide, raises our capabilities to a new level." Townsend, which has about 160 employees, claims "firsts" in producing Microsoft Windows-based real-time financial software, real-time streaming data over the Internet, integrated solution for Nasdaq trading rooms and Windows-based direct access trading. "I think Lehman picked up a real gem," said Sang Lee, co-founder and managing partner of Boston research firm Aite Group, noting that Townsend is a "proven player" in DMA and order management systems and has the capability to support asset classes beyond equities. "As firms increasingly move to support multi-asset-class trading, platforms similar to Townsend Analytics will continue to play an important role," he said. Jeffrey Kutler contributed to this article.