What is in store for Pershing customers in 2008? To find out, we recently interviewed Craig Messinger, head of Trading Services, and John Vrettos, head of business strategy and development for Trading Services:

Between the sub-prime crisis, surging oil prices, the weakening dollar, and other factors, financial markets weathered a difficult environment in 2007. How did this impact the ability of Pershing Trading Services to support its customers?

Messinger: Well, since we are not a player in any of the most challenged debt markets—subprime, collateralized debt obligations (CDOs), structured investment vehicles (SIVs), and so forth—we were able to help our customers navigate some pretty troubled waters with a good deal of success. The areas of the fixed income world where we were involved—corporates, municipals, governments, and agencies—actually performed well in 2007, for both our customers and their clients.

What is the fixed income outlook for 2008?

Messinger: It’s very positive. Something like 80 million baby boomers with more than $8.5 trillion in assets will begin to retire this year. By 2010, retirees will account for more than 13% of the total U.S. population. This demographic trend will translate into an unprecedented demand for fixed income investments that can generate a guaranteed and predictable income stream. Accordingly, we doubled the size of our fixed income sales desk to 22 sales professionals in 2007 in order to offer fuller support to our customers. We also expanded our product offerings to meet the needs of our customers’ clients in such areas as preferreds, medium-term notes, and money markets.

Vrettos: We’re especially excited about the recent launch of our Fixed Income Portfolio Services (FIPS), which helps our customers provide an enhanced fixed income experience for their clients, and we will continue to expand our FIPS offering in 2008. We’ll also broaden our relationships with manufacturers and issuers in order to provide our customers with access to the entire range of fixed income investments, including syndicates and structured products, adding more sales associates, as needed, for better coverage and service.

Are there similar plans in place for beefing up your equities trading capabilities?

Vrettos: Absolutely. The big story in the equities arena, of course, is globalization, which continued to drive worldwide economic expansion in 2007. That trend shows no signs of slowing in 2008. So, our global reach— the fact that we offer 24/6 equity agency execution in 65 countries worldwide—will continue to be a real plus for our customers and their clients.

Messinger: One of the things we did to improve our equity services was to create separate, channel-specific sales desks—one for our registered investment advisors, another for broker-dealers, and so forth. In the nondollar space in particular, we are retooling our infrastructure to provide our customers with enhanced access to global markets. For example, we are working with a leading third-party Order Management System (OMS) to improve straight-through-processing handling of non-dollar trades with a goal of improving the accuracy and processing speed.

Overall, how do you think the financial markets will fare in 2008?

Messinger: Predictions are tough, of course, but I would say we’re cautiously optimistic. Our view is that it will probably take another quarter or two before we have a satisfactory workout of the sub-prime pain in terms of its effect on financial services firms. But the marketplace is far from unhealthy, and the environment should remain in reasonably good shape provided the market can contain the sub-prime losses and avoid hitting a recessionary skid.

Vrettos: One of our key points of differentiation has always been Pershing’s commitment to customer service, regardless of market conditions. We’re constantly looking for new ways to leverage advanced technology—always on an open-architecture platform—to make it easier and faster for our customers to do business with us. But it’s our emphasis on personal service, I think, that sets us apart.

Messinger: I couldn’t agree more. Our business model is built on providing superior service, unsurpassed execution quality, and high-touch service. Our value proposition, of course, is that we are never in conf lict with our customers. We don’t engage in proprietary trading or pay commissions to our sales personnel. None of that will change in 2008.

To find out how you can take advantage of Pershing Trading Services, contact your home office.