In the midst of an equities trading slump, Vandham Securities is launching an electronic trading desk. The independent broker thinks it can compete with more established firms by keeping staff lean and focusing on execution quality, service and capitalizing on longstanding relationships.
Established in January, the Vandham Securities electronic trading effort was started by Seth Weber, a 20-year veteran at both Lehman Brothers and its successor, Barclays. There, Weber ran electronic broker-dealer services-the selling of algorithms and routing products to B-Ds that used them to execute their own trades.
Vandham of Woodcliff Lake, N.J. is looking to expand beyond Weber’s broker-dealer client list and is seeking to do business with institutional money managers.
And why would institutional clients want to trade with Vandham?
Unlike larger firms that offer myriad other services, such as research or investment banking to clients, Weber, a managing director and head of the electronic trading business, said his firm can provide more tailored service, independence, anonymity and a closer relationship.
“My plan is to leverage relationships that I have developed over the last 20-plus years in the business,” Weber said. “Whether it be previous customers, colleagues that used to work with me or referrals from any of the above. The disruption across Wall Street over the last few years has scattered many old friends and clients into new roles at new firms, potentially opening new doors for myself and Vandham.”
Setting up the electronic broker-to-broker trading business was his primary mandate. Prior to his arrival, Vandham was focused both on retail and institutional investors via its high-touch trading desks.
Vandham’s electronic desk consists of Weber and three other sales traders who monitor algo performance and watch to make sure a client’s order is being properly routed and executed.
The firm’s algorithms range from basic VWAP and TWAP to more complex ones that minimize information leakage by selectively choosing trading venues. The smart order router taps both lit and dark venues.
“There is good liquidity in both lit and dark venues, and accessing them without information leakage is most important for our clients,” Weber said.
With several brokers now trading with the desk, Weber said the push now is to approach buyside customers as well. He added that he is currently courting money managers and that buysiders “have been warm” to an independent firm such as Vandham in the electronic space as an alternative to large firms.