In the high-stakes world of online institutional brokerage services, investors demand up-to-the-minute research and timely trade execution. To help meet those needs, Merrill Lynch & Co. is unveiling a plan for management service provider Aptegrity Inc. to oversee applications on the Merrill Lynch Exchange, its proprietary Web portal.
Although the financial-services firm won't disclose the value of the contract, Merrill Lynch is paying Aptegrity a monthly fee to develop add-on capabilities, troubleshoot, and distribute a number of debt, client-service, and equity applications. Such a partnership is key to helping Merrill Lynch deliver dozens of enhancements each week, says Michael Packer, the head of Merrill Lynch's institutional E-commerce efforts. "Working at this pace to enhance research tools and provide new capabilities requires us to partner," he says. "We couldn't do this on our own."
In 1999, Merrill Lynch tapped internal business and IT staff as well as external service providers to develop the Exchange and its applications for delivering market research and performing trade execution, clearing, and account settlement. Merrill Lynch's institutional clients, which include fund managers such as Fidelity Investments and businesses such as Ford Motor Co., made $1.9 trillion in trades in 2000 over the firm's E-commerce platforms.
Tower Group, a research firm that studies banking technology, estimates Merrill Lynch will spend nearly $3 billion on technology this year-at least $500 million more than competitors Morgan Stanley Dean Witter and the Goldman Sachs Group. Although Merrill Lynch was slow to provide online investment capabilities, Packer's strategy of using internal and outsourced IT staff helped the firm come a long way in a short time, says Forrester Research analyst Todd Eyler.