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EDS snags NASD outsourcing deal

The IT services giant wins a 10-year outsourcing contract worth nearly $2 billion from the National Association of Securities Dealers.

IT services giant Electronic Data Systems today won a 10-year outsourcing contract worth nearly $2 billion from the National Association of Securities Dealers (NASD), a securities-industry, self-regulatory agency that also owns the Nasdaq-Amex Market Group.

Under the deal, EDS confirmed that it will be responsible for applications development and maintenance, Internet and intranet development, Web hosting, and distributed systems support for the NASD, according to Diane Coffman, a spokeswoman for EDS.

The NASD contract is EDS's second largest deal next to its $17 billion services contract with long distance phone company MCI WorldCom, announced earlier this year.

Today's agreement is the first of its kind in the securities industry, the NASD said in a statement. The agreement will help the agency realize more than a half billion dollars in cost reductions during the life of the contract, the company said.

In addition, Plano, Texas-based EDS said it has formed a strategic relationship with the NASD, called NasTech, to develop and design new applications and systems for use in the securities regulation industry.

Even though EDS isn't necessarily handling any of the NASD's e-commerce plans, EDS will be providing the infrastructure for its system, said Tony Peters, an EDS spokesman. Peters added, "For EDS this means, for one thing, a step forward in the new frontier in e-business and e-commerce."

Peters said that the EDS deal with NASD is really limited to regulatory applications and maintaining and building regulatory technology systems and products.

With the availability of extended hours trading and Internet trading, EDS is helping the NASD to fulfill its role to make that system fair, safe, and secure for investors.

"This relationship sets a new pace and standard for EDS," EDS senior vice president Coley Clark said in a statement. "It is an opportunity to reclaim the IT services industry that this company invented. It is also an opportunity for the NASD to continue defining the shape and direction of the securities industry."

This is EDS's first major financial service agreement under the leadership of the company's new chief executive Richard Brown, who entered his CEO post in January. As reported, Brown has been on a mission to turn the company around and had told analysts in April that he won't be satisfied until EDS retains its leadership role in this industry.

Currently, Peters said that the NASD has a variety of vendors working for them. About 160 consulting companies and 350 consultants are working on the NASD's IT projects, not including internal resources

The NASD said that more than 350 of its IT employees will join EDS. In addition, EDS said it will manage another 350 third-party consultants as part of NasTech, to be headquartered in NASD's Rockville, Maryland-based technology center.

EDS said that the transition of employees is scheduled to happen on July 1.