US-based block trading platform operator Pipeline Trading Systems has announced a new name for the business, Aritas Securities, as part of the firm’s comprehensive restructuring effort following an investigation by the US Securities and Exchange Commission (SEC) in October 2011. In the European Union, Aritas Financial succeeds Pipeline Financial Group.
Pipeline was fined US$1 million last year, after the SEC found that the firm failed to disclose to clients that the vast majority of orders executed in its dark pool were filled by Milstream Strategy Group, an entity trading entirely owned and funded by Pipeline and managed by former Pipeline CEO Fred Federspiel between 2004 and 2006.
Following the investigation, the firm saw the departure of its senior management with the resignation of Federspeil and the retirement of executive chairman Alfred R. Berkeley, as well as the end of operations at Milstream Securities.
In November, Jay Biancamano was hired as executive chairman and tasked with rebuilding customer trust in the company. Biancamano previously served at rival block crossing venue Liquidnet and at agency broker ITG, which also runs the POSIT dark pool. In addition, the firm completed work on a new version of its flagship product Alpha Pro, updated its Algorithm switching engine and reorganised its internal structure.
“Of all that we’ve done here in the past three months, the most important thing is to dedicate ourselves to doing business with the utmost integrity,” said Biancamano. “Pipeline created great, game-changing technology. With a fresh commitment to serving our customers transparently, Aritas will offer them a new opportunity to take advantage of our unique offerings.”
He added that the popularity of Alpha Pro was growing prior to Pipeline’s SEC agreement, and expressed hope that the renamed company can regain its momentum in 2012.
Aritas has completed a new version of Alpha Pro, a product which recommends trade execution strategies upon order arrival based on real-time analysis of comparable past orders and outcomes. The technology has been updated to allow users to adopt strategies based on the benchmark of their choice. The improvements to the algorithm switching engine are intended to boost its ability to protect against adverse selection by predictive switching between algorithms.