In the midst of the severe equity trading slowdown, Newedge has shut down its cash equities and exchange traded funds desks this morning, according to people familiar with the situation.
All told, the closure affects around eight traders and staff, sources said.
The closure comes on top of reports that Newedge’s research analysts had parted ways with the brokerage two months ago.
Nicole Wesch, global head of media and public relations, Newedge UK Financial, said that the firm doesn’t comment on specific personnel matters and "its client offering will remain unaltered."
One former Newedge employee told Traders Magazine that the both the cash and ETF desks suffered from a lack of financial and technological support. Without up-to-date products and research, he said the shutdown of the groups was inevitable.
"Cash and ETF desks were gone effective this morning," said the former employee. "There was never any support of those desks from the firm when I was there."
Newedge isn’t alone in shuttering trading operations this year. Ticonderoga Securities, WJB Capital, Kaufman Bros. and Momentum Trading Partners have also closed down as consolidation in the industry continues apace. Already struggling firms will have to compete for a slice of an ever-shrinking pie if volumes remain low, which seems likely as investors have had little stomach for U.S. equities.
The cash desk was headed by Michael O’Hare, who arrived in October 2011. Prior to that, he spent three years as senior managing director and head of equity trading and sales at LaBranche Financial Services. He also spent almost four years at JP Morgan Chase as a managing director and head of equity trading. He began his career at Lehman Brothers in 1990, spending 16 years there and rising to managing director and head of block trading.
Another broker with knowledge of the shutdown said Newedge had been trying to grow its cash and ETF business, but confirmed that a lack of financial support was central to the demise of the cash and ETF desks.
"There wasn’t any cash behind the trading business," he said. "I think the firm is likely to go back to its roots and niche business of trading derivatives like futures, commodities and foreign exchange."
–Michael Scotti contributed to this report
