Agency brokers, consider the bar raised.
Years ago, just being an agency broker — one that trades on behalf of customers exclusively and not for its own account — may have been enough to attract order flow, as the buy-side steered away from the potential conflicts of interest inherent in the Bulge-Bracket model.
But today just being agency isn’t enough. With the current technology arms race underway, its starts with what’s under the hood.
“This is a technology game now and having a modern yet tested platform that provides both performance and adaptability is a must,” said Glenn Lesko, Chief Growth Officer at Dash Financial Technologies. “That allows you to be as adaptable and responsive as the buy side requires given their need for custom-built solutions in days rather than weeks or months.”
In part due to these technology demands, the agency brokerage space has seen a significant amount of change over the past dozen years. One of the largest agency brokers, ITG, was acquired in March by Virtu Financial, the electronic market maker that also bought KCG in 2017. Other strategic transactions have played a role in reshaping the space, including Nomura’s purchase of Instinet, and Bloomberg Tradebook exiting the execution business. At the same time, newer tech focused entrants have emerged, such as Dash, which since launching in 2011 has grown to be the dominant player in US options routing with a 15% market share and provides a host of technology and white-label solutions for cash equities and options.
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