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September 1, 2012

Macquarie Looks to Boost Blocks

By John D'Antona Jr.

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  • Macquarie Looks to Boost Blocks

Macquarie Securities has hired almost a dozen senior-level sales traders and sales staff for its high-touch desk, a move designed to bring in more block trading and leverage the brokerage firm's extensive research offering.

Ken Savio

The high-touch hires will look to bring in additional block business through targeted indications of interest, said Ken Savio, senior managing director and U.S. head of Macquarie Securities. The buyside today wants to trade more discreetly and in size.

"IOIs are becoming a more regular part of the traders' daily work flow," Savio said. "We are sending out more IOIs now than ever before. The buyside wants to trade blocks and have less market impact, and we see that as our job to deliver."

Brokers in the last year or so have improved the quality of IOIs. These electronic messages sent to the buyside that advertise trading situations are more likely today to represent a real order-a natural-than in the past, when they were often fishing expeditions. Brokers see quality IOIs as the best way to increase their high-touch business.

"The revamping of our IOIs has improved our trading flows," Savio said. "We've identified our clients and are listening to them."

That is, Macquarie is now targeting its IOIs to specific investors in a bid to trade more blocks. And so far this year, Savio added, the firm has seen more block trades and overall trading volume rise.

IOIs are only part of the plan at Macquarie. At the root of the strategy are the traders and sales traders, who will leverage the firm's global research product, Savio said.

So far, the strategy has allowed the firm to inch up the rankings. According to Bloomberg data, Macquarie has climbed from 47th in broker rankings, with 3.01 billion shares executed in 2010, to 45th, with 3.64 billion shares in 2011 after Savio's arrival. And in 2012 the firm has continued to grind ahead to 44th, despite trading only 2.03 billion shares.

Armed with a quiver full of research, and reach into the C-suite, the firm's new additions are in place on the New York and Boston trading desks. They have on average more than 15 years of experience. Savio spent almost his entire career at Bear Stearns, where he rose to global head of trading and sales trading. He told Traders Magazine the veterans brought more experience to the desk. Macquarie added new hires without materially adding to its overall count.

Here are the hires: