Richard McSherry, Expert on Trading Costs Worldwide, Dies at 77

Richard T. McSherry, co-founder of a firm that crunches second-by-second data to assess trading costs worldwide and help institutional investors maximize profits, has died. He was 77.

He died on Sept. 26 at the Hospice Inn in Melville, New York, part of the Hospice Care Network, according to his wife, Laura McSherry. The cause was prostate cancer. He lived in Plandome, New York, and Gulf Stream, Florida.

Elkins/McSherry LLC, founded in 1991 by McSherry and James Elkins, pioneered a transaction-cost analysis that is used by many of the largest pension funds, investment managers, banks and brokerage houses in the world. Since 1999 the firm has been a unit of Boston-based State Street Corp., the third-largest U.S. custody bank after Bank of New York Mellon Corp. and JPMorgan Chase & Co. Elkins and McSherry stepped down as president and chairman, respectively, in 2004.

“He will always be with me and sitting across from me in our shared office where we spent what seems a lifetime together,” Elkins wrote in an e-mail to friends after his former partner’s death. “Dick McSherry was a very special man, and I feel lucky to have been touched by him all those years we spent together. He loved to refer to us as the two guys from Brooklyn who made it.”

Career Path

McSherry traced his faith in computerized data-crunching to his U.S. Army service in the 1960s, when he learned how to run “a computer-fire direction-control system for cannon with atomic capabilities,” he said in 2002, according to a profile in Global Money Management, a newsletter published by Euromoney Institutional Investor Plc. “It taught me to be very careful about getting my calculations right.”

Following jobs at International Business Machines Corp. and Chase National Bank, McSherry in 1984 joined Abel/Noser Corp., a New York-based brokerage that offered transaction-cost analysis and competitive commissions to win pension-fund business.

McSherry rose to head of sales. In 1991 he and Elkins, the firm’s head of trading, formed what was then Elkins/McSherry Co., which expanded transaction-cost analysis to markets worldwide.

“By 1993, we had a product for analyzing transaction costs in the domestic U.S. market, but recognized that the real future lay in the analysis of global markets,” he recalled, according to Global Money Management.

Figuring Costs

In 1995 McSherry and Elkins copyrighted their International Trading Cost Analysis System, which helped steer client business to brokers with the best execution and lowest commissions.

“Sponsors and trustees in many European countries don’t know what they are paying in transaction costs,” he said in 2002. “If they did, they could save a lot of money.”

Today, New York-based Elkins/McSherry gathers data from institutional investors covering more than 24 million trades executed in 47 countries, “time stamped to the closest second.” The trades represent $7.2 trillion worth of principal and 375 billion shares of trading by 1,500 investment managers and 2000 brokers worldwide, according to its website.

Richard Thomas McSherry was born on Sept. 7, 1936, in Brooklyn, New York, one of two sons of Richard McSherry and the former Josephine McCooey. He graduated from the Brooklyn Preparatory School, a Jesuit school that closed in 1972, and was active in its alumni association.

He graduated from St. John’s University in New York in 1958 with a Bachelor of Science degree, majoring in statistics.

Following his Army service, he worked for 17 years at IBM as a marketing executive. In 1981, Chase hired him to lead marketing of its trust department. Chase “brought me to Wall Street and put me in contact with big pension funds,” he said. “I learned to work with them.”

He and Elkins opened their firm in 1991 at 555 Madison Ave. in Manhattan, home to the brokerage Bernard Herold & Co., which cleared its trades for the first four years.

McSherry was predeceased by his first wife, the former Ursula Healy. Their daughter, Jeanne-Marie Kempster, survives him, as do his second wife, the former Laura DiLorenzo, and her son from a first marriage, Anthony Bozza.

He served on the board of the Woodbury, New York-based Hospice Care Network.

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