Cowen Raises Its Electronic Trading Profile with ATM Acquisition
In a move to ramp up its electronic trading capabilities, Cowen Group recently announced the acquisition of Algorithmic Trading Management, an independent provider of algorithmic trading strategies.
The purchase of ATM, a Jersey City, N.J.-based developer of multi-asset algorithmic trading strategies, immediately gives Cowen access to an algorithmic trading capability which it can offer to its buy side clients as well as an existing financial technology business which it plans to keep separate and further grow the business.
“For Cowen, this acquisition is a plug and play opportunity for us in the electronic space,” says Douglas Rivelli, co-head of Quantitative Trading Solutions at Cowen Group. Rather than constructing the models and infrastructure from the ground up, the brokerage firm is acquiring 100 percent of the firm’s products, technology and staff. “We avoid a lot of the pitfalls and stumbles you have in building it internally from scratch,” he explains.
First, Cowen will deploy the ATM algorithms in global equities, and it will deploy them in other asset classes over time, including futures, options and FX.
“If you consider the offering that we have in global equities, options, futures and FX, the time to build all that would take quite a number of years,” says Rivelli, who will serve as CEO of ATM and will be responsible for overseeing ATM’s businesses.
Given that ATM has been around since 2003 and its algorithms have been operational since 2006, they’ve been battle tested both in terms of infrastructure as well as execution, asserts Rivelli. According to marketing information on it website, ATM focuses on development, support and customization of quantitative trading strategies. ATM has than 20 algorithmic strategies for single stock, pairs trading and portfolio trading listed on its site. The firm has also provides an outsourced electronic trading platform for second tier brokers.
Though Cowen declined to disclose the purchase price, executives said they had considered a number of other options, including other acquisition candidates as well as internal development. “Quite frankly when we look at all of the options, there really was no comparison to ATM as being far and away the best option for Cowen and one that would yield the best results for us and our clients,” says Rivelli.
Among a number factors that made ATM interesting to Cowen, first and foremost was the quality of the product, according to Rivelli, “We were very impressed with the execution results relative to some of the other products that we had been using internally and felt it had really given us a best-of-breed product,” says Rivelli. “Secondly, the ATM offering is global in nature and multi-asset class, so it gives Cowen a much broader suite and platform of products and asset classes and geographies we can offer to our customer base,” says Rivelli. The third aspect was ATM’s “deep and ongoing research effort,” continues Rivelli. It has a robust team looking into micro-market structure and optimizing execution strategies and marrying portfolio optimization with portfolio execution risk. “And the work that they were doing was more impressive than I have seen and we think those factors made ATM a great fit for Cowen,” says Rivelli.
For Cowen, a research-centric firm that mainly focused on high-touch trading capabilities, ATM was acquired to fill a void in its electronic offerings to customers.
“We have a strong banking, research and block-trading business. The one area that we needed to address in a significant way was electronic trading,” says Rivelli. In fact, Rivell joined Cowen last April from Weeden & Company where he was a managing director and Co-CEO of its algorithmic subsidiary,Pragma Securities, one of Wall Street’s algorithmic aggregators of liquidity.
Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
Tweet This