GTS agreed to buy Cantor Fitzgerald LP businesses that handle exchange-traded funds and orders from retail investors, becoming the latest high-frequency trading firm to start directly serving consumers.
Two units will shift to GTS, along with about 35 employees, the company said Friday in a statement that didn’t disclose financial terms. One trades ETFs with customers and on exchanges.
The other, a wholesale market-making business, executes stock and ETF trades for retail investors. Bloomberg first reported a month ago that the companies were discussing a deal.
The acquisition makes GTS look more like competitors Citadel Securities and Virtu Financial Inc. All three are automated traders that help conduct transactions at the New York Stock Exchange floor.
But Citadel and Virtu are giants in handling orders from retail brokers, and GTS will try to chip away at their dominant position.
“Clients asked for a new level of innovation and competition in this space, and GTS is happy to deliver,” co-founder and Chief Executive Officer Ari Rubenstein said in an interview.
The deal gives GTS an industry legend, Reggie Browne, who has spent two decades evangelizing and trading ETFs. Eric Lichtenstein and Darren Taube are coming along to help him run the ETF business.
Joe Pleffner, Mike Strashnov and Menash Cohen are joining to oversee the equity wholesaling division; the trio had jumped to Cantor in 2016 from KCG Holdings Inc., now part of Virtu and one of the industry’s biggest players in wholesaling.
Browne helped firms such as BlackRock Inc.’s iShares and Vanguard Group Inc. create hundreds of ETFs, and he promoted the use of the funds among institutional investors. At GTS, his sales prowess will be backed by one of the world’s most sophisticated trading platforms.
“Looking at GTS and their values, it’s a perfect match to continue my life’s work,” Browne said in an interview.
“For the first time, Main Street broker-dealers, asset managers and retail investors will have access to institutional-quality client service and the market’s best technology,” Rubenstein said. “The retail ETF investor will upgrade from a Piper Cub to an F-16.”