Rishi Nangalia, chief executive of REDI Holdings, and Josh Schubkegel, the firm’s chief technology officer, recently visited the offices of Traders Magazine following the firm’s sale to a consortium of Wall Street firms. Nangalia and Schubkegel sat with editors Peter Chapman and John D’Antona Jr. and talked about the sale by Goldman Sachs, how the buyside and sellside can benefit from an independent firm, and the firm’s growth and future.
REDI is primarily known for its execution management system software that Goldman Sachs acquired when it purchased Spear, Leads & Kellogg in 2000.
Here are some excerpts from the conversation.
Traders Magazine: Why did Goldman Sachs sell part of its interest in REDI?
Rishi Nangalia: This has been in the works for two years now. This was the only way that REDI could grow – by becoming an independent company. As an independent company, there is a better potential for us to grow strategically. Goldman Sachs sold a majority equity stake. The whole impetus, which began a couple of years ago, was that REDI is a portal that connects the buyside and sellside. As time progressed, people didn’t want several portals on their desktop, and thus we began the process of becoming independent. Brokers just wanted to put their algos on REDI and become a partner with us as they saw value in this.
Traders Magazine: Is the cost to the broker of maintaining a platform like REDI getting more difficult? Is this why REDI was spun-off?
Nangalia: It’s a byproduct. By taking technology out of a single broker and putting it in into a consortium’s hands the whole industry benefits. By developing something independent like REDI, everyone can benefit and at a cheaper cost. Rather than having six portals with six banks supporting them, it becomes easier for the buyside to work here and as a result the sellside benefits, too.
Traders Magazine: Are you collaborating with your new partners to bring new things to REDI?
Nangalia: We have some interesting collaboration opportunities with our new partners. BoA is bringing InstaQuote into us. Barclays BARX platform has some products we’d like to bring onto the REDI platform. We’re doing some collaboration with Citadel through their Citadel Technologies unit. BNP wants us for distribution in the U.S. We have some strategic initiatives with each of our investors.
Traders Magazine: Even the private equity firm, Lightyear Capital?
Josh Schubkegel: Yes. By them coming to the table it makes this more of a strategic move as they see it as a sound financial deal – not just a bunch of brokers looking to cut costs. Lightyear sees this as a good investment having financial upside. It’s not solely about the brokers joining together to cut costs.
Traders Magazine: How many clients (firms) does REDI have?
Nangalia: We have 800 active clients and a similar number that are inactive and use us as a back-up system. And we have about 100 brokers on the system and are in the process of adding more as we speak. We’re working with all the brokers to get them on the REDI platform. We won’t compete with them but view them as partners.
Traders Magazine: So REDI is growing then?
Nangalia: Two years ago we were about 35 people. Now we are 95 people strong. And as a result of the sale we are getting another 25 technologists from Bank of America’s InstaQuote. As a matter of fact, between 70 to 80 percent of our team are technologists.
Traders Magazine: So what is next?
Nangalia: We’d like to begin expanding asset classes beyond equities, options and futures and move into forex and new geographies. The brokers have the sales force and staff that can help REDI achieve this. If we, as a vendor, do a better job, then we can move higher in the pecking orders of vendors out there. We have a built-in prospect list and pipeline that we can go after.
