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Pragma Builds Expansion Plan with New Group from Partner Weeden
Traders Magazine Online News, March 30, 2009
Algorithmic provider Pragma Financial Systems is ramping up its ambitions and execution services with the help of longtime partner Weeden & Co., which substantially increased its stake in the firm earlier this year. Doug Rivelli, the new CEO of Pragma Securities, the firm's broker-dealer, will help oversee the expansion of the firm's trading and algorithmic products to both the buyside and sellside.
Rivelli, who ran Weeden's electronic trading desk, joined Pragma in January. Weeden enabled him to move the firm's electronic trading group to Pragma. David Mechner, who co-founded Pragma in 2003, remains president and CEO of Pragma Financial Systems and will run the algorithmic development business. Co-founder Lee Maclin continues to have an advisory role at the company.
"I believe Pragma is one of the leading providers of algo products to the Street, and the opportunity to do it right is extraordinarily enticing," Rivelli said. As part of this transition, Weeden, which has had a partnership relationship with Pragma for four years and distributed Pragma's algorithmic platform to buyside firms, became a significant investor in the company. Rivelli and Mechner declined to say how much of Pragma is now owned by Weeden.
Barry Small, CEO of Weeden & Co., will also serve as chairman of Pragma's board. "I'm very excited at this time to help blend the talents of Pragma and Weeden to serve institutional clients in the electronic trading space," he said.
Pragma's focus will remain on electronic and algorithmic trading products. About half of its almost 50 employees are in algo development, according to Mechner, and the firm is hiring more quants and researchers. This staffing makes Pragma one of the largest algo development groups on Wall Street, Mechner said.
Pragma Securities is currently a non-executing broker-dealer. That will change sometime in the second quarter when it begins to function as an executing broker. The company is also gearing up to offer a broader range of execution services.
In May, Mechner said, Pragma will release an upgraded suite of algos to its customers. Pragma Securities will roll out a dark pool in the third quarter. Later this year, the firm will also add a suite of international trading products. Pragma currently has about a dozen people in execution sales and support, and plans to hire another half-dozen this year, according to Rivelli.
Rivelli and six colleagues who constituted Weeden's algorithmic business joined Pragma on Jan. 1, with Weeden's approval. "The idea was that having an independent company dedicated solely to the development of high-quality algorithmic products was in Weeden's best interest, and in the best interest of Weeden's clients," Rivelli said.
David Margulies, who ran algo sales at Weeden, is responsible for sales at Pragma. Pragma in March also brought Curtis Pfeiffer on board from Bank of America as director of business development. He had been head of electronic trading sales at BofA.
Pragma's OnePipe product, which aggregates dark pools, will continue to be distributed exclusively by Weeden, although Pragma's other products will be available through Pragma to both buyside and sellside clients. These include TradeEngine, the algorithmic software distributed to buyside firms that integrates with the client's front end, as well as PEAK, the algorithmic product for broker-dealers.
Pragma's business has grown rapidly in recent years and its revenues doubled over the last year, Mechner said. About 70 percent of Pragma's business comes from buyside firms. Although some buyside clients have licensed Pragma's algos for use internally, the vast majority of institutions are currently Weeden clients. Buyside clients include traditional mutual fund companies, long-short funds and hedge funds.
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