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August 1, 2013

Peak6 Sells its NYSE Floor Brokerage and More

By Peter Chapman and John D'Antona Jr.

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  • Peak6 Sells its NYSE Floor Brokerage and More

Peak6 Sells its NYSE Floor Brokerage

Chicago's Peak6 Investments sold its New York Stock Exchange floor brokerage MND Partners to TJM Investments, a Chicago agency brokerage.

Eighteen employees joined TJM, including MND founders Neil Catania and Michael Smyth. Co-founder Dan James left the firm in January. Thomas Kane, who joined MND as a managing partner in 2009, when it was acquired by Peak6, also left in January.

Peak6, an options market-making firm, acquired MND to facilitate the dealer's hedging activities. The arrangement was also intended to benefit MND, which would be able to match Peak6's stock orders with those of its institutional customers.

According to Catania, that arrangement didn't work out as well as expected. Peak6 sold MND, he said, because it decided it did not want to be in the agency business, preferring to focus on proprietary trading.

Catania says MND was a profitable business, but it has had its defections. Last summer, three MND sales traders left the firm to join competing NYSE floor broker Greywolf Execution Partners. At the time, a Greywolf spokesperson told Traders Magazine the traders were drawn by Greywolf's research offering, something MND lacked.

TJM Investments is a Chicago agency brokerage founded by Thomas J. Murphy and two partners in 1996. It specializes in futures and options trades for hedge funds. Of the deal, executives said it made sense for a boutique agency brokerage to offer trades in both futures and equities.

-Peter Chapman


Rosenblatt: No Order Type Conspiracy

There is no conspiracy between exchanges and professional traders to create order types that work to the disadvantage of the buyside.

That's the conclusion of the authors of an exhaustive study of exchange order types conducted by Rosenblatt Securities. Despite concerns to the contrary, the researchers found no basis for alarm.

"We've been critical of some functionality," authors Andrew Upward and Justin Schack wrote, "but we find no evidence that exchanges or automated proprietary traders have conspired to create 'killer' order types that disadvantage end investors, as some critics have contended."

The study concluded that the 252 order types offered by the 13 stock exchanges were a natural outgrowth of an "unevenly regulated" electronic market. But the order types did not incorporate any "egregious" advantages to professional traders. Certain order types offered by the New York Stock Exchange do offer its designated market makers advantages, but those have been "expressly blessed by the regulators."

Rosenblatt undertook the study in response to concern swirling in the institutional trading community that a proliferation of "thousands" of order types had made the marketplace too complex and placed buyside traders at a disadvantage.

It concluded that there are only 252 available order types and that those are based on only 36 archetypes.

Rosenblatt did conclude that the proliferation of order types had indeed added to the complexities of the marketplace and that such increased complexity "undoubtedly creates opportunities for the savviest market participants." The broker urged buyside traders to bone up on their order types.

-Peter Chapman


Merrill Lynch is Top Broker: Greenwich

Bank of America Merrill Lynch ranked first among the top U.S. equities trading houses in an annual survey conducted by Greenwich Associates. The win comes against a backdrop of declining commissions and retrenchment across the Street.