B2B Models: Customers Will Decide Who Wins

B2B exchanges are generating a lot of buzz in the securities industry as sell side firms jostle for position, but what's not clear is what type of model will work, say panelists at FTE's B2B Exchanges: New Models for the New Economy session. Referring to recent moves by the largest players in the market-namely Morgan Stanley, Merrill Lynch and Goldman Sachs--to form a portal called TheMarkets.com-Alexis Kopikis, co-founder and senior vice president product strategy and management of WorldStreet Corporation, said it appears that the largest players are building a "country club model." The message they're sending is "we're the producers of the goods-we want to deliver it in our channel and control that 100%." But Kopikis said that model will never work because the buy side customers like American Century, Scudder and Putnam "don't have that kind of time. They want their value to be delivered to them," says Kopikis, who predicts that the closed models will not survive because customers will rebel.

According to Richard Friesen, chairman and founder of ePit Technologies, "the big issue is going to be to sort out the value proposition that everyone brings to the customer from a time and information advantage. "We see a shift to customer power and migration of the value proposition," he said.

David Moshal, founder and CTO of @TheMoment-which builds Internet exchanges-said B2B exchanges are popular now because "the Internet provides access to unlimited numbers of buyers and sellers." This allows people to question the value of fixed pricing and to experience the value of dynamic pricing, which the financial industry has known for a long time, he said. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio