Barclays Capital is at an advanced stage in integrating the US equities trade execution services of Lehman Brothers with its existing capabilities and will continue to roll-out ex-Lehman products to clients globally over the rest of 2009.
Alasdair Hodge, managing director and head of e-commerce, Barclays Capital, said the combined equities offering gives the UK investment bank an opportunity to grow market share among asset managers.
“We’ve had a good response to our DMA (direct market access) and algo offerings in the past, but the additional trade execution and research capabilities we’ve been developing since the Lehman acquisition mean we’re strongly placed now to increase our footprint with asset managers significantly,” he told theTRADEnews.com. Both firms already had strong quant businesses, but found they had minimal client overlap, according to Hodge.
Barclays Capital, the investment banking arm of Barclays Bank, acquired the US assets of Lehman Brothers after the New York-headquartered firm went into insolvency in September 2008. Japan’s Nomura purchased Lehman’s European and Asian assets.
Hodge said that the combination of the predominantly US Lehman assets with BarCap’s existing equities business lines would form the basis for a global service offering. “Although we’ve acquired a US franchise, the equities business has plans to expand significantly in Europe and Asia. As well as Lehman’s US equity research capabilities, we’ve added resources in Japan and Europe. You need to be global to be a credible player.”
In addition to DMA and algorithmic trading capabilities acquired as part of the Lehman purchase, additional electronic execution capabilities that Barclays Capital plans to offer its clients include LX, a global liquidity crossing network, SubM, a high-frequency trading platform, and a range of pre-trade analytics tools.
The integration process at Barclays Capital involves the decommissioning of DMA services and execution algorithms where there is overlap between existing BarCap and legacy Lehman capabilities. “This allows us to choose ‘best of breed’ across our equities execution and algo platforms,” said Hodge. The retained algos can be tailored for specific strategies and markets.
Nomura has already announced plans to introduce a dark pool in Asia, based on Lehman’s LX crossing platform, and has relaunched Lehman’s European electronic trading platform, both rebranded as ModelEx. Although Lehman previously offered crossing under its LX brand on a worldwide basis, the service was not necessarily based on the same technology globally.
Hodge expects Barclays Capital to differentiate itself from competitors on range of products, global reach and quality of service. “High service levels are critical, particularly in this environment. You can have the best box of tricks in the world, but you still need to have the humans to support it,” he said.
The new equities offering will sit alongside Barclays Capital’s offerings in other asset classes. “We will also be looking for opportunities to cross-sell BARX capabilities in FX, fixed income and futures & options,” Hodge added.