The New York-based investment bank says the acquisition will bolster execution management systems for institutional investor clients.

Lehman's entry into the market follows follows similar deals struck by big US investment houses looking to beef up their order-routing and algorithmic trading capabilities. Citigroup set the ball rolling in June 04 with the acquisition of New York-based Lava trading. Citi's lead was followed earlier this year by Bank of New York, which acquired direct market access firm Sonic Financial technologies in March, and JPMorgan, which bought privately-held technology firm NeoVest in June.

Bart McDade, Lehman Brothers global head of equities, says of the Townsend deal: "The acquisition of Townsend Analytics significantly enhances our franchise and demonstrates our commitment to delivering state-of-the-art electronic trading capabilities to our clients worldwide."

Townsend's RealTick platform is a global, multi-broker, multi-asset, direct market access system.

Jeffrey Wecker, managing director and global head of electronic client services at Lehman adds: "The RealTick platform includes many services that will enhance the execution experience for our institutional, hedge fund, investment advisor, prime broker and clearing services clients."

Townsend founders Stuart and MarrGwen Townsend moved to assuage fears about the change of ownership for other financial sector clients: "Since forming the company 20 years ago, we have remained committed to maintaining the highest level of service to distribution partners and preserving the integrity and confidentiality of their data and order flow. We are confident that our partnership with Lehman Brothers will preserve this platform."