WHAT INDUSTRY DYNAMICS SET THE STAGE FOR iPerX?

High commission costs have burdened externally managed or sub-advised platforms for decades. These burdens have only recently been addressed in a comprehensive fashion by iPerX. A frequent question is: “Why did this challenges take so long (decades) to solve?”

The answer is that a convergence of factors needed to occur to make a solution such as iPerX both practical and feasible from a technical, legal, regulatory and business perspective, including:

• Active Boards Push For Greater Transparency and Lower Costs: Boards are now much more active in their oversight function as fiduciaries, especially with respect to cost savings, transparency and supervision.
• SEC Reg NMS: SEC Reg NMS (National Market System) mandates executing venues direct orders to the venue offering the best available price… as the executing venue now assumes ‘Best Ex’ responsibility. Thus, all execution venue (exchanges, ECNs and market-makers) have an SEC regulated responsibility to provide the best price available to all small orders (the “Low Touch” orders). As a result, there is almost no manner in which a money manager’s trader’s can add value in executing “low Touch” orders. The only variable is a higher or lower commission cost.
• Recent Scandals: The $50 BB Madoff scandal (an adviser who didn’t trade for 13 years), the $7 BB Sogen loss from a rogue trader, and the illegal expropriation of assets by external money managers have created demand for real-time transparency into external managers.
• Growth of Externally Managed and Sub-Advised Assets: The assets in many Plans, Trust and Funds now exceed the assets of most of their external money managers.
• Difficulty in Block Trading: The difficulty and higher costs money managers now experience in trading large blocks of shares eliminates the historical benefit provided by a money manager aggregating large numbers of smaller orders into a single block. The traditional “We use our buying power to benefit you” rationale is simply no longer true.
• Rise of Electronic Trading: The rapid proliferation of low cost agency-only electronic trading (without human involvement) at less than 0.5 cent per share or less provides numerous low cost, easily accessed options to significantly lower brokerage costs.
• Patented Industry Standard System: UAT leverages its intellectual property to make iPerX an industry standard system, at last making a comprehensive solution feasible.
• Entrepreneurial Perseverance: Even with the above factors, this solution requires the perseverance of determined entrepreneurs to create a comprehensive industry solution.

Once all of these factors were present, iPerX was developed to represent the next step forward in the natural progression of the externally managed and sub-advised industry. With iPerX in place, the entire industry is positioned on a strong and healthy foundation for future growth and prosperity, both domestic and abroad.

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