Penson to Purchase Schonfeld's Clearing Business

Ivy Schmerken, Wall Street & Technology

Penson Worldwide agreed to acquire the clearing business of privately held Schonfeld Securities, LLC, a New York-based securities firm, which has been a pioneer in active trading.Penson anticipates that the acquired Schonfeld clearing business should be accretive to earnings at approximately 14 cents per share in 2007 for the nine-month period following March 31, 2007 when conversions off Schonfeld accounts are currently anticipated to be complete, says the release.

The purchase also includes the sublicensing to Schonfeld of certain products of Nexa Technologies, Inc., Penson's trading technology subsidiary.

In terms of acquiring Schonfeld's clearing business, Penson has signed long-term contracts with Schonfeld Securities and the six correspondent firms for which Schonfeld provides clearing services. Schonfeld and five of the six correspondents have signed 10-year contracts, although two of the correspondents may elect to terminate their contracts after five years, subject to a payment to be made by Schonfeld or other parties. These correspondent firms are involved in proprietary trading, active retail trading and institutional trading services to more than 1,100 traders.

Schonfeld began searching for a clearing provider about a year ago, stated Daniel Son, Penson's president and cofounder in the release. Penson's commitment to the clearing business together with its advanced technology "won the day," stated Son in the release, adding, "The fact that Penson is a leader in the active trading market makes this a great fit for both firms."

Schonfeld Group President Andrew Fishman, stated in the release that traders would see significant benefits. "Along with the ability to clear equities, options and futures at one company, Penson also offers a much more extensive and readily available stock borrow list," Fishman stated. "By aligning with a company dedicated to clearing, we can much better serve the needs of the trading marketplace," he further added in the release.

On Oct. 4, Schonfeld Group announced the merger of its retail trading operations with Lightspeed Holdings, LLC, to form one of the largest companies devoted to the professional trader. 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