Knight Trading is to acquire Direct Trading Technologies, a provider of electronic dealing services for hedge funds and institutions, for an undisclosed sum.
Privately-held Direct Trading offers order-routing services to ECNs and Nasdaq's SuperMontage with integrated options and futures capabilities. Clients also have access to an agency execution desk and third-party research and execution through soft dollar programmes. In 2004, Direct Trading traded more than 2.5 billion over-the-counter and listed shares.
Under the terms of the acquisition, Direct Trading will maintain its brand, employees and business model, operating as a separate broker-dealer subsidiary of Knight under the direction of EVP Derek Stein. MD and co-founder Mark Gulis and president William Cronin will remain with the group following the merger. Co-founder and CEO Allan Peterson expects to retire from the company following the close of the transaction.
News of the deal comes as Knight restructures its equity trading operations into three distinct units: broker dealers, electronic trading and institutional. Direct Trading will be a core element in the newly created electronic services group when the takeover is finalised within the next six months.
Thomas Joyce, Knight chairman and CEO says the restructuring reflects the different needs of clients.
"The newly created electronic services group, for example, recognises the growing demand from institutional clients for high-technology, low-touch electronic trading," he says. "At the same time, the new structure will help us find ways to operate our businesses with greater efficiency, respond quickly and compete more effectively in a market environment that is getting increasingly challenging."
The broker-dealer group will be headed by Mony Rueven, senior managing director, who oversees broker-dealer sales, marketing and trading in listed, Nasdaq, Bulletin Board, Pink Sheets and foreign equities.
Gregory Voetsch, executive vice president, is responsible for the institutional group, which includes institutional sales and trading for listed, Nasdaq and foreign equities; program sales and trading; and London operations.