Nomura Makes A Play for U.S. Electronic Trading Business

If you come to work feeling you want to make a difference every day, then Nomura Securities International might be the place for you. That message came through loud and clear when Advanced Trading visited the firm’s New York trading floor a few months ago.

Nomura’s Americas division launched a new 75,000 square-foot cash equities trading floor last October in lower Manhattan’s World Financial Center with 500 workstations. Advanced Trading toured the new floor and met with sales traders, executives and technologists.

During the first half of 2009 there was huge amount of uncertainty, and a lot of talent had been shaken loose by the financial crisis, Nomura’s executives told us. While many firms were retrenching from the financial crisis in the first half of 2009, Nomura went on a strategic hiring binge, snapping up talent from competitors that were either downsizing, merging or had accepted bailout money.

Since it had been operating with only 50 staffers selling Japanese research from New York, Nomura was taking on a big mission. It added a total of 449 total staffers over the course of a year and a half. While it might not have been possible to build these teams three to five years ago, Nomura seized the moment. To spearhead its U.S. equities strategy, Nomura tapped Ciaran O’ Kelly, who joined the firm from Bank of America in July of 2009. Since then, the firm began to aggressively expand its U.S. equities trading operations and simultaneously start a U.S. equities research department. In addition to cash equities trading, the new floor houses program sales, futures, U.S. equity-linked convertibles and prime services.

But to attract traders, analysts and front office IT staff away from the top tier firms, Nomura had to provide trading technology and infrastructure that was equal to, if not better than, that of its competitors. Within a couple of months, Nomura had hired 60 IT people from finance, telecom, defense and the medical industry to work on a host of new trading systems for the U.S. market.

Interestingly, while Nomura would be competing against the major firms for talent, it was attractive because it was starting from scratch and was not encumbered by legacy systems, its executives conveyed. While Nomura had moved swiftly to acquire the Lehman Brothers’ international operations in Europe and the Middle East, those systems were not applicable to the U.S capital markets. So Nomura had to build all new connectivity to exchanges, order routing technology, collocation services, direct market access, algorithms, analytics and a quantitative product.

But while this was a Greenfield position, at the same time, Nomura’s Asia-based parent had its tentacles in the largest global asset management firms. For speed to market, Nomura licensed FlexTrade as its execution management system; however, it built it’s own order management system. Through Puma, its homegrown OMS, traders have access to the firm’s global order flow from institutional clients. Puma is also integrated with the firm’s Web-based analytics, called NomuraNow TradeSpex, which is used to provide pre-trade cost estimates to institutional clients and to select the best algorithm for a given trade from Nomura’s ModelX suite. During a recent Russell 1,000 index rebalancing, Nomura was able to handle 25,000 different client allocations by the 4:45 pm deadline.

Now, Nomura is on a mission to break into the top 10 rankings of U.S. brokers. Last week, Bloomberg Markets posted a ranking of the best brokers in North America based on data from Ancerno. Nomura is ranked at No. 7 on the list, while Deutsche Bank took No. 1 spot and Liquidnet is ranked at No. 4.

Of course, one of the unique perks of working at Nomura is a sushi chef who comes in on Wednesdays to serve lunch. So while that may not explain the firm’s climb into the top 10 rankings of best brokers, perhaps the Omega 3s are working!