Macquarie, Fox River join Canadian algo trading businessAKHTAR SOOMRO/Reuters
Macquarie Group's Canadian brokerage business is the latest to jump into the algorithmic trading fray in this country, teaming up with a U.S. partner to give clients the ability to computerize their trading.
In other countries, Macquarie has long offered algorithms and direct market access, which enable clients to connect directly to exchanges through the securities firm's pipes. In Canada, the Australian bank has invested heavily in building a conventional sales and trading operation, but had yet to tack on electronic execution.
Macquarie has teamed with Fox River Execution Services, part of Sungard Brokerage and Security Services, to offer algorithms to Canadian clients. Fox River clients in the U.S. will now be able to trade through Macquarie's connections to Canadian markets.
"Several customers in the U.S. weren't just trading the U.S.," said Paul Daley, head of product development at Fox River. "They asked us to extend our product line into Canada, so we did that for northbound flow."
Macquarie started to focus on electronic trading and direct market access in Canada about 18 months ago, bringing on trader Pete Gombocz from a rival brokerage to build out product. Mr. Gombocz said that building algorithms that are customized for the Canadian market would be too expensive, and using "white-labelled" algos that are already in the Canadian market would not allow Macquarie to differentiate itself. That led to the partnership with Fox River.
"If you look at Macquarie globally, we offer DMA in all the other regions we're in," he said. "Canada would be the last logical place to put it in. There's no shortage of reports out there that show that algorithmic trading and DMA trading is on the rise. If this is the preferred way that a client wants to pay us, we want to offer it."
Macquarie is clearly hoping that it can win business because of its status as a brokerage without any direct ties to Canadian stock markets. That is unlike the Canadian banks that now hold big stakes in TMX Group after the Maple Group takeover, which presents a possible conflict of interest.
"We have no ownership stake in any venue," Mr. Gombocz said.