Reuters Holdings PLC has agreed to buy a leading maker of software for trading rooms, raising questions about its long-term strategy for this market.

The agreement calls for London-based Reuters to pay $125.1 million for Teknekron Software Systems Inc. of Palo Alto, Calif.

Teknekron makes software called Information Bus that manages the distribution of information to computers on a network. While the software can be used in a range of industries, its primary application has been in trading rooms.

100 Customers

Since the first installation of the software by Fidelity Investments in 1987, more than 100 companies, including Bank of Boston, Chase Manhattan Bank, Credit Suisse, and J.P. Morgan, have agreed to use Information Bus to distribute critical pricing and analytical information to high-powered computers on traders' desks.

Reuters, a leading supplier of electronic market data, also sells software called Triarch that is one of the leading competitors to the software sold by Teknekron.

Company officials said that both products will continue to be supported.

"Both Teknekron's products and our own Triarch system will benefit" from the deal, said David Ure, Reuters' executive director for marketing and development.

The advantage, he said in a statement, is that the Triarch and Teknekron units will get access to each other's "software skills."

But Rupinder S. Puri, a Chase senior vice president for trading operations and technology, said that he "would be concerned" if Chase were a user of the Triarch system.

The reason is that with its purchase, Reuters appears to be moving toward Information Bus and away from Triarch.

But, for Chase's interests, the deal is good news, because it should make more resources available to Teknekron.

Chase agreed to use Information Bus in a new trading floor due to open in New York late next year.

The deal "really validates the decision we made" to buy Information Bus, he said.

Reuters had revenues of $2.4 billion and profits attributable to ordinary shareholders of $357 million last year. Teknekron had revenues of $38.7 million last year and pretax profits of $8.2 million.

The software company was created in 1986 by Teknekron Corp., a venture capital concern that spun off the software systems unit the following year.

Another key question is the degree to which Teknekron will continue to support "open systems," meaning support of connections between different vendors' software and computers.

Openness is at the core of Information Bus. As deployed in trading floors, the software consists of electronic hooks called "application program inter-faces" that take data from market data vendors and banks' and vendors' software for distribution to traders.

There is concern that market data vendors may be reluctant to continue to allow their information feeds to be routed through software sold by a competitor. There is also concern that Reuters may push Teknekron to favor Reuters' market data feeds.

Sharon Gregory, vice president of Micrognosis Inc., which competes with Teknekron and Reuters, said this issue was a big drawback to the deal.

"We question the wisdom of the move by Teknekron, because they will lose their independence from market data vendors," Ms. Gregory said.

Diana Finnegan, an executive editor of Trading Systems Technology, an industry newsletter, said that banks and brokerage firms at times have been reluctant to buy software from the same company that supplies then market data, to avoid giving too much control to a single vendor.

|Safeguards' Cited

But Reuters and Teknekron officials said that Teknekron will maintain its independence, with Teknekron's management retaining operational control of their business, and Reuters only holding "certain rights" to ensure that Teknekron's board of directors "operates in a manner which safeguards Reuters' investment."

Norman Siegier, a senior vice president of Teknekron Software Systems, added that the vendor expects to encounter no difficulty in continuing its strategy of selling open systems.

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