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October 3, 2011

SunGard Restructures Trading

By Peter Chapman

SunGard is in the process of melding its disparate brokerage properties into what it hopes will be a cohesive whole.

Bob Santella

Late last year, the software conglomerate set about reorganizing the structure and management of its global trading business, which involves both software sales and brokerage services.

SunGard formed its global trading business in early 2009, shortly after it acquired vendor GL Trade, installing Yassine Brahim as global head of trading. Brahim was GL Trade's chief executive officer.

With the shakeup, Raj Mahajan, formerly SunGard's president of trading, has taken control of all global trading operations, replacing Brahim.

Under Mahajan, Bob Santella-formerly chief operating officer of Fox River Execution, an electronic brokerage acquired by SunGard last year-has become president of SunGard's brokerage operations.

Santella oversees all three of SunGard's brokerage units: Assent, SunGard Institutional Brokerage and Fox River Execution. As part of the changes, Santella became president and chief executive officer of both Assent, the largest of the three broker-dealers, and Fox River.

As such, he replaced both James Weber at Assent and his twin brother, Ron Santella, at Fox River. At SunGard Institutional Brokerage, Santella splits oversight duties with Kevin Rafferty, that organization's long-standing chief executive.

SunGard's plan is to merge all three broker-dealers into Assent, thereby presenting customers with a unified and comprehensive offering and streamlining the entire brokerage effort.

Heretofore, cohesion had been impossible. Legal and regulatory restrictions resulted in the three broker-dealers operating as independent silos, with minimal interaction, Santella explained.

The first phase of the merger has just occurred. SunGard Institutional Brokerage, a high-touch agency brokerage based in St. Louis, is now a part of the Assent broker-dealer. The SIBI name is being retained for legal reasons, but services will be offered under the Valdi brand, used by Assent since last year.

In April 2010, SunGard began rebranding many of its technology products, as well as Assent's brokerage services, under the Valdi name. The Valdi order management system, for example, is based on components of GL Trade's OMS and the SunGard Brass system.

Assent, based in Jersey City, N.J., now markets itself as Valdi Liquidity Solutions. It serves the sellside almost exclusively with electronic order routing and membership on various exchanges. KeyBanc Capital Markets, for instance, became an Assent customer in 2009.

For a number of years, Assent was a player in the proprietary/day-trading business, offering individuals technology and a place to trade. Assent exited that business last year. The firm reports equity of about $330 million in its most recent financial report.

SunGard has also applied to the Financial Industry Regulatory Authority to merge Fox River into Assent, but has not yet received approval. Fox River, based outside Chicago, provides algorithms to buyside traders.

The Fox River acquisition filled a void in SunGard's offering to money managers. SIBI offers high-touch execution services and a routing network, but had no algos. Once the merger of Fox River into Assent does occur, Santella explains, the Fox River brand will be retained.

The joining of SIBI with Assent is effectively a merger of high-touch with low-touch. SIBI's sales traders may now offer Assent/Valdi's low-touch trading and routing services. Assent staffers will be able to recommend high-touch services when warranted.

The merger is expected to make it possible for employees of both broker-dealers to interact, Santella said. That in turn should lead to better customer service.

"I see a big uptick in our opportunities and much better cost management as a result of this streamlining," Santella told Traders Magazine. "Regulatory barriers separating the businesses will be eliminated."

All told, SunGard's brokerage operation has about 150 employees.