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TowerGroup: Cost of Disaster for Securities Firms Could Be $3.2 Billion

$1.7b will be spent on hardware, report says, with $1.5b spent on software and services.

Needham, Mass.-based TowerGroup estimates that it will cost securities firms approximately $3.2 billion to replace the technology destroyed in the World Trade Center disaster.


-- Of the $3.2 billion, $1.7 billion will be spent on hardware (trading stations, sales stations, workstations, PCs, services, printers, mini-computers, storage devices, cabling, communications hubs, routers switches, etc.). -- The other $1.5 billion would cover the services and software needed to install and connect the network, operating systems and applications infrastructure of the securities firms.

Securities Positions:

-- Approximately 30,000 securities positions (trading, sales, research and operations) were destroyed in the seven World Trade Center buildings. -- TowerGroup estimates another 15,000-20,000 positions will need to be replaced in adjacent buildings such as the World Financial Center (Lehman Brothers and Merrill Lynch) and adjacent buildings (1 Liberty Plaza, the Bankers Trust Building).

Source of Estimates:

TowerGroup arrived at these figures by approximating that there are:

-- 16,000 trading desks (including turrets and multiple workstations--outfitted with multiple flat screen displays) at approximately $52,000 -- 34,000 general PC workstations at a replacement cost of $5,000 (including monitors, extra memory, software and networking equipment) -- 8,000 Intel-based servers and approximately 5,000 UNIX servers were lost at an approximate replacement cost of $370 million -- $300 million in printers, hubs, switches, data storage and other networking hardware will be needed to support the network of technology that was lost.


-- $1.5 billion will be needed to install, configure and manage the implementation of this equipment. There will be a great demand for consulting and contract services to develop, install and implement new trading stations and firms' technology infrastructure.


-- This spending will take place over the next 12-24 months as firms either rebuild existing sites or find new sites and relocate.

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