New Travelers Group To Meet All Units' Market Data Needs

TRAVELERS Inc. has created a new corporate entity that will provide telecommunications services and administer market data for all of Travelers' financial companies, which include four buy-side institutions: American Capital Management & Research, RCM Capital Management, Travelers Insurance Co. and Travelers Investment Management Co. (Timco). When consolidation is complete, the new group--dubbed Travtech, for Travelers Technology Services--will provide services to a community of users that includes investment managers handling more than $138 billion in third-party assets.

Sources say that details of the new Travtech organization, which debuted internally two weeks ago, are still being hammered out by senior Travelers management. In fact, at press time, an official at one Travelers-owned buy-side company, San Francisco-based RCM, was unaware of the new technology unit's existence.

However, according to an official at Timco, all of the "five or six" separate units' telecommunications departments will report to Rich Witenberg, who is executive vice president and head of the communications services unit at Travelers' Smith Barney Inc. subsidiary. Witenberg did not return calls seeking comment.

"It's like an internal outsourcing arrangement," says the official. Travtech's mandate is to allow Travelers' institutional investors to wring cost savings and exploit economies of scale, says the Timco official. Sources say that one of the key reasons for establishing the group is to permit Travelers' subsidiaries to lease hardware rather than depreciate it on their respective balance sheets.

The creation of Travtech could also provide a significant boost in the quality of the information technology available to most of Travelers' buy-side units--which, not surprisingly, are somewhat less cutting-edge than their sell-side siblings. For example, brokerage Smith Barney supplies its brokers with local area network-based quote services and is in the midst of a major project to roll out a new, Unix-based digital data distribution system to all of its traders; in contrast, Travelers' buy-side units rely on a mix of stand-alone terminals and oddball digital data distribution systems.

As Smith Barney's Witenberg takes charge of the less technically sophisticated units, it is likely that Smith Barney's inclination towards digital data distribution will impact the money managers at Travelers' other units, says the Timco source.

At present, a survey of the units reveals that the groups have little in common when it comes to information management technology. Thus, for technology vendors, the birth of Travtech may eventually mean more business for fewer suppliers.

However, it's unclear how much decision-making will be wrested by Travtech from the hands of the individual business managers: "We are operating independently," says an RCM official. "We have a clear choice to do what we do. We don't have a lot of information about Travtech. That isn't to suggest that we would or would not participate."

The so-called securities department of Travelers Insurance, which manages funds for the parent company and its insurance subsidiary, comprises some seven traders and 35 so-called investment professionals who rely on IBM's RDXII digital market data distribution system. The traders have access to real-time data; the others are supplied with quotes delayed 20 minutes, says a Travelers source.

Sources say that the IBM platform delivers data from Reuters Holdings PLC and Dow Jones Telerate. These users also have access to Thomson Financial Services Inc.'s First Call Corp. and stand-alone terminals from Bloomberg L.P. and Desktop Data Inc.'s Newsedge, say sources.

Travelers' insurance securities department handles some $20.6 billion in third-party assets. The securities department also includes the remnant of the money-management staff affiliated with the erstwhile Travelers Asset Management International.

As for Timco, sources say that that unit's 40-odd portfolio managers and analysts rely on Thomson's ILX Systems Inc. and Bridge Information Systems Inc. for quotes and analytics, First Call for earnings reports and Factset Data Systems Inc. for historical databases. Timco also relies on Bloomberg terminals for fixed-income data, sources say.

The other two money management arms of Travelers--Houston-based American Capital Management & Research and RCM--manage $16.5 billion and $23.8 billion, respectively. RCM also relies on Bridge for equity quotes and Bloomberg, Reuters and Telerate terminals for fixed-income data. American Capital uses Bridge for equities and Knight-Ridder and Bloomberg standalone services for fixed income.

Meanwhile, Smith Barney employs ADP's FS Partner for 18,000 institutional and retail broker quote terminals. At the same time, the brokerage's nearly 1,200 traders are in the process of rolling out Reuters' Triarch 2000 digital data distribution system to provide access to market data feeds from a variety of vendors, including Knight-Ridder, Reuters and Telerate. The firm relies on a mixture of mainframe-based and distributed IBM RS/6000-based applications for back-office functions such as account history, margin and portfolio tools. Smith Barney has some $77.3 billion in third-party assets under management.

Witenberg's current responsibilities at Smith Barney include oversight of telecommunications for the brokerage's capital markets, corporate and branch office-based user groups. Though each of the three departments currently maintains its own telecommunications personnel, many of their functions have already been centralized under Witenberg. Specifically, Witenberg oversees network services, business operations and financial control, as well as contracts and acquisitions.

According to one official at Timco, Witenberg will have responsibility for a similar set of functions at Travtech, though on a much larger scale.

The official says that it is "likely" that Witenberg will report directly to Travelers Inc.'s chief information officer Rick Morrison. Witenberg currently reports to Smith Barney senior executive vice president Mel Taub. Sources characterize Witenberg's relationship with Morrison as friendly. Morrison was traveling at press time and could not be reached for comment. Taub did not return calls by press time.