August 07, 2006

After spending 19 years at Morgan Stanley, Brian Fagen has left the firm to join Lehman Brothers as managing director and U.S. head of electronic sales. Fagen says he made the move for the personal challenge and the opportunity to build a new business at Lehman. At Morgan Stanley, Fagen was head of electronic trading and portfolio trading sales.

"The reason you move from one place to another is always a difficult question to answer," Fagen relates. "This was about personal challenge and the opportunity to build a business. Morgan Stanley will continue to be a great business, but this was an interesting opportunity to build out an electronic trading business at a full-service firm from a different perspective."

Fagen says his priority is to continue to build out Lehman Brothers' client electronic trading offering - "everything that we deliver to clients around electronic trading," he explains, including direct market access, algorithms, the front end and analytics. It is unclear at this time how many people will report to Fagen as the organizational structures are in flux and haven't yet been defined. "It's a new position and we're still trying to decide what the organization will look like," he notes.

"Clearly, there is a huge opportunity in electronic business, and with [Lehman's] acquisition of Townsend [Analytics], we have the ability to deliver a true single-stock, multibroker front end," Fagen adds, referring to Townsend's RealTick. "The acquisition raised the stakes on how Lehman could compete with other firms in the marketplace." One thing is certain, Fagen asserts: The world of e-trading will migrate toward multiple-broker solutions as opposed to single-broker solutions, and RealTick provides the opportunity for Lehman to offer its clients a multibroker front end.

Fagen explains that maintaining broker neutrality is essential, so Townsend will remain a separate business from Lehman Brothers, and the organizations will maintain an "arms length" relationship. Other broker-dealers also are repositioning their offerings to provide multibroker solutions, he notes. Weighing these factors, Lehman created Fagen's position because the firm "understood they required a greater level of investment in the structure behind the business," he says. Last year, the firm also hired ITG's Frank Troise, who is responsible for product management for the electronic trading of equities and listed options.

"In the past, Lehman delivered internally built solutions, which were not really competitive with other single-stock portals out there," Fagen continues. "The question became, do you try to build one or buy and redeliver one?" He emphasizes that it's not RealTick or the highway - Lehman also will offer trading through order management systems and other vendor systems.

Fagen began working at Morgan Stanley before he even graduated from college. He started as a summer intern in May 1987, he recalls, and began working full time the day after his last final exam the following year as an analyst on the portfolio trading desk. Since then, he held numerous positions, including head of program trading and sales, head of equity futures, and head of money manager derivatives sales.