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June 2, 2009

Hudson Securities Expands Institutional Reach

By James Ramage

Hudson Securities, which built its business as a wholesaler, is looking to make inroads into the institutional agency trading space.

The Jersey City, N.J.-based firm added seven new sales traders from Schonfeld IBS to the 13 already there, and plans to continue hiring. The sales traders arrive from Schonfeld's institutional arm-not from among its day-trading unit, said Marty Cunningham, chief executive of Hudson Holding Corp., Hudson Securities' parent company.

Marty Cunningham

Hudson has also been adding to its research product for buyside clients since February, when it acquired Westminster Securities, a banking and research firm not affiliated with BNY ConvergEx's Westminster Research Associates. Together, the additions form the core of Hudson's transformation into an independent institutional broker, Cunningham said.

"We have a pretty strong foothold," he said. "And based on the Schonfeld [traders] coming on, we represent-based on pay structure, quality of life, the technology that we have in place-a viable option not just for potential new recruits, but for clients who want to pipe into us."

Hudson set its sights on the institutional business space a couple of years ago, Cunningham said. Today, the space is crowded, and growing.

For the past couple of years, sales traders have been leaving full-service firms for brokerages with variable compensation packages that pay sales traders on their production. The turmoil at the investment banks only aggravated the trend of sales traders and other investment professionals going on the move.

Hudson is following many independent firms that have been bulking up their sales trading numbers in the last year or so.

It began the migration two years ago when it tabbed Dave Scialabba from E*Trade to head its institutional unit. The institutional effort is primarily agency, but in some situations, Hudson will commit capital, Cunningham said. "They need to be serviced."

The firm acts on a principal basis in its market-making group, where it trades more than 15,000 names. However, to entice the buyside, Hudson believes that its advantage is its broker-dealer order flow, which can interact with institutional orders to provide greater liquidity, Cunningham said.

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