- Strategic Financial Resources is a financial market consultancy that aims to help firms anticipate and address issues from the evolving electronic marketplace. - It has a network of partnerships with leading financial service entrepreneurs and firms that provide institutional order flow, significant liquidity, and new technology. - The consultancy sees an opportunity for an alternative trading system called PDQ that provides buy-side institutions like pensions direct access to liquidity while addressing issues like high fees and predatory trading strategies of some existing alternatives.

1. PDQ
Procedure Derived Quotes
-Strategic Financial Resources-
“Anticipating Market Evolution”
AGENTS OF CHANGE
December 4, 2011
Fred A. Gahl
917-509-1990
fgahl@stategicfr.com

2. Strategic Financial Resources
• Financial market consultancy featuring a network of partnerships with
leading financial service entrepreneurs and firms that includes;
– Institutional order flow,
– Significant liquidity providers,
– “Next-step” technology.
• GOAL
– ANTICIPATION-provide firms the ability to identify, and address, issues
and impact of the evolving electronic marketplace,
• Provide specific solutions to current needs,
• Provide dynamic means to introduce ongoing business
development strategies that assure positioning in evolving market
structure going forward.

3. Strategic Financial Resources-Agents Of Change
• Point Of Difference- “The Edge”
– Intricate knowledge of inner functions and relationships that
comprise financial markets,
– Extensive experience regarding strategic business development
related to all categories;
• Buy Side,
• Order Management + Execution
• Sell Side,
• Exchanges
– Network of relationships with best-of-class cross-category
expertise and resources;
• Strategic partnerships,
• PULSE-market structure indicators.

4. Market Dynamics-Buy Side
• Major pension funds and institutions provide commission flow that drives
the market,
• Institutional investors;
– Pay $28b/yr to brokers for equity trades
• Average commissions costs for a $50b fund is $150m
– Pay $26 b/yr. in transaction costs-Liquidity

5. Market Dynamics-Sell Side
– Brokerages/banks are seeking means to maximize the revenue
potential of orders they receive.
– Competition has forced brokerage/banks to;
• Address costs of executing orders on major exchanges,
• Seek additional sources of revenue.
– Major banks and brokers have created private alternative
trading systems (ATS’) to trade their customer and firm orders;
• Avoid NYSE fees;
• Cross/match internal flow,
• Internalize-Trade against internal flow,
• Limit access to competing liquidity providers,

6. Alternative Exchanges-Sell Side
• Common Ownership ATS’
– Some major banks and brokerages joined a strategic partnership with
one major liquidity firm-(Direct Edge)
– Some major brokerages have partnered with a discount ATS-(BATS)
• Specialty ATS
– Anonymous institutional order matching-(LiquidNet)

7. Level the playing field..
• Major pension funds, institutions, and independent liquidity
providers, are being competitively disadvantaged,
– Want an alternative to banks and brokerages controlling
order flow.
– Want a means to avoid the adverse impact of high-
frequency traders; quote stuffing, information leakage,
“pennying”,
– Want direct access to significant sources of liquidity.
The market place needs an alternative…

8. The alternative…to alternatives
• PDQ ATS is a point of difference;
– Provides significant liquidity seekers an independent alternative;
• Pensions, hedge funds, institutions.
– Open access to/for liquidity providers,
– Introduction of patented PDQ “algorithmic auction” process;
• Anonymous,
• Confidential,
• No gaming /”pennying”,
• Price/Quantity execution,
• Significant opportunity for price improvement

9. The benefit
• PDQ provides buy side partners;
• Increased market transparency.
• Access to deeper liquidity.
• Creates a peer to peer grid bringing liquidity to your
desktop.
• Strategic business opportunity to;
– minimize market related costs
– maximize profitability.