Cowen Group joined the electronic trading revolution with the acquisition of the 20-person shop, Algorithmic Trading Management, a provider of global, multi-asset-class algorithmic trading models.
Under the agreement announced yesterday, ATM will continue to operate as a separate financial technology business. Douglas Rivelli, co-head of quantitative trading services at Cowen, will serve as chief executive officer of the unit and will be responsible for overseeing its business.
ATM, based in Jersey City, N.J., was founded in 2003. The firm initially focused its sales effort providing small and mid-size brokers algo trading solutions they could white label to clients. ATM later expanded its offering to the buyside. The platform offers single stock trading, program trading and pairs trading.
Cowen officials called the deal an important strategic move. It brings ATM additional sales heft and distribution channels—something the firm previously lacked. Cowen, meanwhile, gains an algorithmic trading suite, which fills a hole in its offerings.
When Cowen was looking at areas it needed to develop, electronic trading was at the top of its list, Rivelli said. The firm did a lot of work analyzing whether it should build an algorithmic team in-house or acquire a company that was already established.
“When we started to look at ATM, what we realized was they had an absolutely wonderful product,” Rivelli said. “The breadth and scope of what they had to offer was really significant. The one thing that they lacked was a really strong commercial and distribution partner.”
Tom O’Mara, head of equities at Cowen, said the firm is always listening to clients and was hearing that they wanted Cowen to offer an algo capability, but the company didn’t want to have a “me-too” algo suite.
“We didn’t want to provide a sub-par product,” O’Mara said. “Doug came on board nine months ago, and we started talking about it even back then.”
Rivelli, an electronic trading veteran, is no stranger to running an algo-trading firm. He was co-chief executive at Pragma Securities before leaving last year. Pragma is half owned by Weeden & Co. Rivelli joined Weeden in 2002 and was a partner and managing director.
Rivelli added that Cowen plans to continue to improve ATM’s algos, which can be executed through Cowen or deployed on a broker-neutral basis.
Cowen expects the deal to close by the end of the first quarter or early in second quarter. Financial terms of the transaction were not disclosed.
Peter Cohen, chairman and CEO of Cowen, said in a statement that ATM has been an innovator and leader in the electronic trading space due to its rigorous quantitative research and exceptional understanding of capital markets.
