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February 1, 2012

Barclays Revamps Algos and Router

By John D'Antona Jr.

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  • Barclays Revamps Algos and Router

Keep it simple. That is the mantra at Barclays Capital as it emerges from a yearlong revamp of its electronic trading products and desk. And with this new simplicity, the bank hopes to increase profits and raise its profile in the equities trading business.

Barclays is employing a three-pronged strategy to achieve its goal of moving up from the middle of the pack and into the top echelon of broker-dealers, say Bill Bell, head of electronic distribution Americas, and Bill White, head of electronic trading. The strategy is to deploy its smart order router globally, grow its dark pool Barclays LX and simplify its algo offerings.

"We wanted to make our team global-take the solid U.S. experience that our clients were getting and make it universal," Bell said.

Bill Bell

"Simple is better. Consistency across global regions is good," White added. To him, simplicity is what the buyside wants. Clients appreciate a coordinated and streamlined strategy, which he thinks is key. And when clients find success using the firm's products, White thinks they'll trade with Barclays more often.

Bell acknowledges the firm was a late entrant in the electronic revolution. But he thinks there is a window of opportunity for Barclays with its revamped offerings. Barclays gained a U.S. presence when it took over Lehman Brothers after it collapsed in the fall of 2008.

According to Tabb Group's Equity Trading 2011-12 report, Barclays has climbed to 10th place among top algo providers, with clients mentioning them 19 percent of the time. In the 2010 report, Barclays was ranked 13th, with clients mentioning them 10 percent of the time.

Bell, a 15-year veteran, began at Lehman in 1993 as a sales trader on the over-the-counter desk. He did stints on the Nasdaq and listed desks, covering long-onlys and hedge funds. Around 2001, he became a team leader and managed cash, program and vol traders.

He told Traders Magazine that top flight electronic products were something the desk was missing when he was promoted to his current position. He took on the origination sales team in 2008 and in 2010 was named head of Americas electronic distribution, incorporating the origination sales, sales trading and the broker-dealer teams. Bell knew the high-touch business and what his team lacked.

"When I looked at the desk back then, I knew that to be successful in electronic trading, we needed to build a complete coverage model that replicated the high-touch desk," Bell said. "The goal was to build a high-touch desk for a low-touch outcome."