INTERVIEW
Brokerages: The Next Generation
Philip Berber Of CyBerCorp
by John Sweeney
Before Philip Berber formed CyBerCorp, a next-generation, electronic brokerage group providing real-time, direct-access trading, and Internet execution technology, he had already made a name for himself as the founder of Financia. Financia was notable for being the first company in Europe to apply artificial intelligence, expert systems, and technical analysis to market prediction, stock selection, and timing. Berber, a native of Ireland, sold CyBerCorp to top US online broker Charles Schwab Co. in March 2000. What's next for him? To find out, Interim Editor John Sweeney spoke with Berber via telephone on May 1, 2000.
ILLUSTRATION BY CARL GREEN
How did you get started with CyBerCorp?
I was really looking for my next adventure after I sold Financia, and I got introduced in the very early days to a daytrading room in Houston at the end of 1995. I saw the technologies that these traders were using, and given my background, I could see how those technologies would evolve. That's when I chose to start CyBerCorp and to design, develop, and deliver the next generation of direct- access electronic trading technologies, which I made available over the Internet in 1997.
And that was key, wasn't it? The advent of the Internet provided the communications structure that would make direct access work.
The Internet meant that these technologies would no longer be restricted to the bricks-and-mortar trading rooms that had evolved in the US. The Internet meant that there were no limitations in terms of making the information and execution technology available to any qualified trader and investor throughout the world.
So what would you say was the most fundamental change for people who have been investing in the stock market in the past two or three years?
The Internet. I think that in the past two or three years we have, by way of the Internet, provided vastly superior information dissemination mechanisms and order execution capability.
In the past, for order execution you used to call your broker and he took care of it. So what changed?
The first change was the ability for an order to be entered and forwarded, somewhat like E-mail to a first-generation online broker. Most recently, the evolution of direct-access technology, and intelligent order routing technology, have taken that process a major step forward.
So when you refer to "first generation," that means you send E-mail to your broker instead of calling him on the phone?
Right. And you use a Web browser and enter your order that way and send the order like E-mail.
Then the broker turns around and actually puts the order into the market.
The broker forwards that order to a Nasdaq market maker or an exchange, such as the New York Stock Exchange (NYSE).
In that case, what happens in a second-generation broker?
The second generation allows the electronic broker, such as CyBerCorp.com, to connect the investor directly and electronically into all of the market makers, all of the new electronic communications networks (ECNs), and all of the specialistsÝ on the exchanges like the NYSE in an electronic manner.
[The creation of the] Internet meant these technologies would no longer be restricted to bricks-and-mortar trading rooms. It meant there were no limitations in terms of making the technology available to any qualified trader and investor throughout the world. -- Philip Berber
Excerpted from an article originally published in the August 2000 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2000, Technical Analysis, Inc.