Only a year after buying the Longview Group, Barclays Global Investors has sold the order management system vendor to TenFold Corp., a software and services company. The sale has raised questions not only about this most recent move, but of Barclays' rumored plans to create its own crossing network, as well as rising discontent among Longview's buy side-users about Barclays, a competitor with just under $600 billion in assets, as the parent company.
Barclays initial investment came at a time when it scrapped its multi-year project to develop a proprietary trade order management system, a decision that cost the firm millions of dollars. But, unlike many of its peers who have decided simply to contract with one of the major order management system vendors, Barclays elected to buy one. Brad Burnett, a senior analyst at Cutter Associates, among others, points to Barclays' intention to create a domestic crossing network with Landmark, Longview's core product, as its front-end.
"I think they bought Longview because they needed a good trade order management system, and, in addition to that, I think they were interested in creating a crossing network," Burnett says. " By getting rid of Longview, I think those plans have been certainly placed on hold."
Joe Rosen, managing director of IT consulting group ETC, agreed, adding that, "Barclay's acquisition made sense for Longview, because of Barclays' deep pockets, but it made no sense for Barclays, except for this crossing network."
A spokesman for Barclays says he didn't know anything about a domestic crossing network, suggesting that people were speaking about E-Crossnet, a European securities crossing network alliance between Barclays UK, Merrill Lynch Mercury Asset Management and 17 other buy-side firms. He would only say that the decision to sell Longview derives from a rapidly moving marketplace. "Longview, in order to expand, needed to accelerate software development and we're not a software company," he says.
Preston Ford, president of Longview, says he can't comment on Barclays' change of heart, and referred all questions about the firm's involvement back to the Barclays' spokesman.
E-Crossnet is a drastically different project than the crossing network Barclays was developing because of the sheer number of participants backing the project. Buy-side firms are more apt to use a crossing network that is maintained by many firms, ensuring stability and anonymity, rather than one supported by a single global institution.
Pointing out the difference between E-Crossnet and the domestic crossing network, Rosen says that the two are worlds apart. "On the face of it, the crossing network is something that would never have a chance of getting off the ground," he says. "Why do it in a way that would enrich your competitor. But, with E-crossnet, Barclays is not the only firm. If a number of big players are involved, you'll feel its more trustworthy, more of a chance not to impugn anyone's integrity."
The idea of a Barclays-administered crossing network never caught on in the industry, Burnett says. "Getting a piece of every trade would have been lucrative for Barclays," says Burnett. "A lot of buy-side firms were uneasy with that. Barclays would have inside knowledge about the trading styles of its competitors, what they were trading and how they were trading it."
Aside from the failed crossing network, Longview had a great interest in getting out of the partnership with Barclays, one that has upset some of its clients from the outset.
"I know of one firm in particular, a client of mine, that was seriously considering moving off of Longview because of the Barclays connection," Rosen contends. "And, I know of others, search projects going on in the past year that have been swayed away from Longview because of the Barclays connection."
Ford says this was never the case. "I know of a couple of competitors that spin that story as many chances as they get," he argues. " There never was a compromising of our priorities."
Ford says he is looking forward to this new partnership with TenFold, a company that, among other things, sells a widely used fee billing system and portfolio management system to the buy side. The partnership will allow Longview to take advantage of TenFold's Universal Application, a layered applications architecture written in C and C++ that allows applications to be built in a matter of months rather than years.
Ford says TenFold's technology will allow Longview to speed up the development of a browser-based version of Landmark. "With Ten-Fold technology, we get the ability to not only support standard desktops, but we can port our technology to a standard Web browser without changing a single line of code," he explains. "In other words, we can leverage a single line of code across two very different platforms."
The Web capability will be included in Landmark 3.0, which will be released late next year.
For its part, TenFold intends to integrate Landmark into its evolving suite of investment management applications.
Barclays Global Investors is a TenFold client.
Both Ford and the Barclays spokesman declined to specify how much TenFold paid for Longview, but the spokesman did say, "it was a good investment for us. We are not selling it at a loss."