by: Jay BerkmanApril 01, 2009 Those that have traded OTC derivatives and / or fixed income products are wellaware of the integral role long-played by inter-dealer brokers, or “IDBs”.Because “capital trades” have become few and far between, firms such asCantor Fitzgerald, Prebon, GFI, InterCapital, and other boutiques havehistorically provided an important link between sell-side primary dealersseeking hard-to-fill liquidity on behalf of their respective buy-sideinstitutional clients and prime brokerage hedge fund customers.Within the exchange-listed product arena, a variety of wholesale market“brokers”, both traditional “voice-based”, and more recently, dark poolcrossing networks, play similar roles; most typically in the course offacilitating orders in large share blocks for both actively-traded andless-liquid issues.That said, as exchange-listed equity options, index products, and ETFscontinue to attract exponentially-increasing capital flows, these seeminglytransparent, screen-based markets are actually becoming increasinglyfragmented thanks to the preponderance of liquidity pools, trading centers,the numerous “open” and “closed” transaction systems, and the many competingmarket-making participants.Consequently, buy and sell-side traders focused on these “direct access”products are faced with the challenge of sourcing optimal liquidity and mostefficient pricing for hard-to-execute trades. In turn, many fund managersand traders are increasingly turning to inter-market-brokers; those thatseamlessly connect to multiple market centers and the wide array of marketparticipants throughout the trading market ecosystem.Case in point: New York-based WallachBeth Capital (“WBC”). A self-described“boutique”, WBC’s team of former proprietary equity option traders andexchange brokers are often at the core of the actual market by virtue oftheir “sitting on top” of walls that separate market participants.Through open-line connections to sell-side facilitation desks, exchangefloor traders, off-floor market-making firms and buy-side managers, WBCprovides a unique service to market-makers, bank trading desks, regionaldealers, and the assortment of prominent hedge funds that are continuouslypursuing traditional and black-box hedging opportunities.Noted David Beth, co-founder and President of WallachBeth, “The fact is,however pervasive “screens” have become, they’re rarely three dimensional.Accessing the real liquidity and discovering the best pricing requirespicking up a phone, or IM’ing someone that is continually canvassing the“natural market” and those that have an axe in particular names, orparticular types of option trades.”Added Beth, “We know that prime broker trading desks are absolutely