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CEO CHAT: Tourmaline's Hantman Talks Equity Trading, Research and Disruption

Traders Magazine Online News, July 25, 2018

John D'Antona Jr.

Technology and innovation continue to disrupt industries and businesses around the world, and the investment management industry is no exception. Regulation – in the form of MiFID II – now adds a new challenge to an industry already wrestling with technological change in both equity trading and research. In a conversation with Traders Magazine, Tourmaline Partners CEO Aaron Hantman and Managing Partner Tim O’Halloran discuss how these trends are impacting their business.

Traders Magazine: This is not an easy time to be a broker. Passive management’s impact on your core client base, technological change and new regulatory compliance requirements are just three of the challenges.  Yet Tourmaline Partners grew last year. How is that? 

Aaron Hantman

Aaron Hantman: While we are a registered broker-dealer, Tourmaline Partners is structured and operates much differently than what most people think of as a broker. Our major differentiator is that, for all intents and purposes, we function as a “buy-side” trading desk. Given our size – last year we traded over $120B in notional value -- we are covered by an extensive global network of 350+ brokers, allowing our clients to benefit from a breadth of relationships that many would almost certainly not have the scale to obtain on their own. We face off with the sell-side on our clients’ behalf and we use an expansive execution and analytics tool set to access superior liquidity and pricing.  We deliver an un-conflicted trading experience, which means that we do not cross blocks of stock or shop order flow, ever. In doing so, we provide institutional clients with a global high-touch trading solution aimed at helping them define, measure and achieve best execution in listed equities and options globally. We've built our business not only on skill and expertise, but on client service as well.  

TM: Many people associate Tourmaline Partners with “Outsourced Trading”, which can mean different things to different people. How do you define it?

Hantman:  When we first launched our business in 2011, we were primarily working with emerging managers who would leverage Tourmaline at the outset to handle their trading in lieu of adding staff. This was typically driven by both a need to keep costs down in a new business and also to allow portfolio managers the freedom to focus on investing.  

Today, the majority of our growth comes from established investment managers, many well up the AUM scale, for whom we are providing “supplemental” support to in-house trading teams, complementing what they do on their own. Market forces are driving the need for this service and hence, our growth.   

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