Ballista Holdings, owner of Ballista Securities, operator of the Ballista Alternative Trading System, expects to increase its staffing by 25 percent and beef up its disaster recovery back-up systems after completing a round of funding.
The rapidly growing ATS, which brings large lot options traders together for crossing sessions, closed on a reported $15 million investment last week. Four prominent financial firms and a few existing investors participated in the funding.
Ballista plans to use the monies to grow its staff on the technology and sales and marketing side. From 26 people currently, it expects to reach about 33 in the near future. The increase on the sales side will allow the ATS to win more accounts from broker facilitation desks and better service those it already has on both the facilitation and the market making side.
Ballista courts two types of broker-dealer trading desks: exchange market makers and institutional desks. The latter bring the business to the ATS. The market makers stand ready to take the other side. Most trades are multi-legged Vol trades with a stock component.
The firm has grown rapidly from its start last October, having traded nearly 2 million contracts since then. It expects to reach a level of 100,000 contracts per day in the third quarter, according to Ballista executives.
Last week’s minority investment came from Morgan Stanley, Knight Capital Group, the private equity arm of Susquehanna International Group, the International Securities Exchange, and others. The four financial firms each get a board seat, bringing the total board to nine. Control resides with Ballista’s four founding partners and at least one other.
Rob Newhouse, Ballista’s chief executive, views the funding as a vote of confidence in the firm. “It validates the model,” he told Traders Magazine. Ballista is attempting to replace with crossing technology the options market’s inter-dealer brokers (IDBs) whose manual methods it considers outdated.
At least one bulge bracket institutional options broker believes Ballista is on the right track. The trading executive, who did not want his identity revealed, believes the IDBs’s “days are numbered.”
“I would like to move away from that entirely,” he said. “If there is somebody on the other side that wants to take it from a Vol perspective, we should be aware of it. And if it is compelling we should be taking advantage of that. If they are representing a client then we should be able to find that client. If they are representing another broker in the market that coincidentally has the other side of the trade, we should be able to find them electronically.”