Highlighting the change of direction taken by the company in recent weeks, Optimark has hired Robert Warshaw as chief technology officer. Warshaw replaces Bill Adiletta who has left the company "to pursue new opportunities," says an Optimark spokesman. Although Phillip Riese, Optimark's CEO, contends that Warshaw's appointment and Adiletta's departure are unrelated, industry analysts believe that Optimark is looking to pump energy into an alternative trading system which is long on promise, but has been till now short on returns.
While Optimark has long been hailed as the most complex and versatile alternative trading system on the market, its complexity has served as a detriment, with buy-side institutions arguing that its graphical user interface is too difficult to master and that the system does not mesh neatly with the institution's existing trading systems.
"I do think that this appointment, whether direct or indirect, has some bearing on the problems that Optimark has faced," says Larry Tabb, the director of TowerGroup's securities and investments practice. "There has been tremendous amounts of pressure on Optimark to increase trading volumes, and since it's a technology driven company, it puts a tremendous amount of pressure on the CTO."
Riese says Optimark has been addressing these industry concerns for some time, and that Warshaw will only help in the further development of the system. "Since launching the system in January of this year, we have morphed it a number of times in response to customer recommendations, particularly to integrate it into their trading environment to make it easier to use, to make it more flexible," says Riese. "We are well along that road, and I expect that Bob Warshaw will continue that and probably accelerate it."
Calls to Warshaw and Adiletta were not returned by press time.
Riese admits that Warshaw will also be responsible for helping transition Optimark into other vertical markets where an electronic matching system might be appropriate.
"Wherever there are markets where buyers and sellers exist, these markets tend to be relatively well-formed, but they are very manual in their operations," Riese explains. "As complexity increases in these markets, they are looking for a well-conceived matching capability."
Riese declines to specify the industries, but he suggests considering the utilities industry, like power and natural gas, as well as communications bandwidth and shipping capacity. Warshaw will also be instrumental in Optimark's movement into the Japanese securities market.
Warshaw's appointment comes only weeks after Optimark signed a deal with the Knight/Trimark Group, the wholesale marketmaker in U.S. equities, which has committed to providing a significant amount of volume to the Optimark system. And, the industry has taken notice.
"Whereas two months ago, I would've said Optimark was dead, I don't have the same prognosis anymore," Tabb points out. "We've spoken to a large number of institutional investors who are re-eyeing Optimark and have not given up the faith."
Tabb continues to explain that while the interface has been a source of contention, Optimark's development of an API that will allow institutions to integrate the system into their existing trading infrastructure will prove to be a boon for the company.
Warshaw, currently CIO of Lazard Fréres, was also a former partner at McKinsey and Co. where he has a history of advising both financial services and technology companies.