ATD Moves Into Options Market Making

Mt. Pleasant, S.C.-based Automated Trading Desk, (ATD) a company specializing in automated trading and customized equity execution, has hired Tim Brennan as executive vice president of equity options to build an automated options market-making system for ATD. This is not a new challenge for Brennan, as he has had experience in creating automated market-making functions for other firms, including Morgan Stanley, Citadel Investment Group and Fox River Financial Resources.

Brennan's most recent stint was with Fox River, where he was responsible for coordinating trading, quantitative research and technology functions in order to develop an automated options system capable of trading more than 600 stocks. Brennan left after six months for the opportunity at ATD, he relates. Prior to his stop at Fox River, Brennan spent 17 months at Chicago's Citadel, where he managed all exchange, options and securities relationships. During his 17 years at Morgan Stanley, Brennan helped build the firm's automated options market-making system and comanaged risk for a large equity options portfolio.

"Today, options market making is more about technology and quantitative science," notes Brennan. "It's no longer about the dynamics of the crowd. You have to have an idea and execute that idea using technology." Emphasizing ATD's commitment to technology, Brennan adds, "ATD does this with equities and will port it over to the options market, which is what will give us a chance for success."

ATD had been looking at options for quite some time, according to Brennan, but the timing now is right to enter the market based on the growth curve of the firm, he says.

Brennan will assemble a team to help him organically build a system. He says he plans both to leverage inside talent as well as make some key hires. In this "incredibly efficient business, you need to be almost surgical in hiring," Brennan explains, adding that essential skills include quantitative research and technology expertise. Brennan says he plans to build a team with a mix of people with production experience and newcomers who bring a "clean eye" to the project. "It's important to have the right mix of people, and finding that will take some time," he offers.

As for market share goals, Brennan explains, the main objective is to be able to grow the initiative and show some competency in options market making over the next 12 months. "As we grow and mature, the market share will take care of itself," he says.

According to Brennan, ATD currently does not have plans to enter other asset classes. But, he says, "As we gain proficiency, it would be exciting to apply that technology to other asset classes."