Goldman Said to Upgrade Dark Pool, Exit Wholesale Market-Making

(Bloomberg) —Goldman SachsGroup Inc. is upgrading its Sigma X dark pool, winding down a retail market-making operation and hiring an executive for Europe as the bank overhauls its equity electronic-execution business.

Goldman Sachsis transitioning to use direct market data feeds as the primary source of information for the dark pool, according to a customer document on its website. For years, the venue has used the public feed thats fractions of a second slower than direct feeds from stock exchanges that many competitors use. The wholesale market-making unit, which has less than 5 percent market share, will begin scaling back in coming weeks, a person with direct knowledge of the plans said.

Raj Mahajan, hired this year as head of the equity electronic-execution business, is pushing to establish the firm as a top player in automated trading. The company last week said second-quarter equities revenue jumped 21 percent to $1.97 billion, trailing only Morgan Stanley among U.S. banks.

Goldman Sachshired Ralston Roberts from SunGard Financial Systems to be co-head of Mahajans group in Europe, the Middle East and Africa, starting next month, said the person, who asked not to be identified because the changes arent public. Roberts will run the group alongside Justin Brickwood, and both men will report to Mahajan.

Partner Level

Mahajan, the first partner-level hire in the banks equities group in more than a decade, joined in January from Allston Trading. He previously worked at SunGard with Roberts. Mahajans group added Keith Casuccio from Morgan Stanley to complement an investment in software and trading infrastructure, Bloomberg reported last month.

GoldmanSachss dark pool was the seventh-largest in the U.S. for trading the biggest stocks, according to data from the Financial Industry Regulatory Authority.

Retail market-makers usually pay brokerages for their individual customer orders and execute them internally.GoldmanSachss share is well below rivals such as Citadel Execution Services and KCG Holdings Inc., as well banks including UBS Group AG.

Improving the dark pool while winding down retail market- making is part of Mahajans overhaul strategy, which is based on winning business from quantitative hedge funds that already are clients of other parts ofGoldman Sachs, such as the prime brokerage. The company believes the group could achieve revenue growth of more than 10 percent from those clients if the changes succeed, a person familiar with the matter told Bloomberg last month.