Aritas closes as ITG snaps up patents
confirmed that block trading venue operator Aritas is in the process of closing
its US business, following the sale of a number of its patents to agency broker
ITG sealed the
purchase of 21 US and corresponding foreign patents from Aritas on 30 May. The
patents relate to block trading functionality, crossing networks, front-end
trading systems and bring the total number of ITG’s patents to 48.
The deal does not
include non-patent assets or personnel of Aritas and its affiliated businesses.
The deal is
unlikely to have much impact on ITG’s POSIT block crossing network, with Bob
Gasser, president and CEO of ITG stating that the acquisition “further protects
the firm’s competitive position”.
With the exit of
Aritas, ITG’s POSIT and Liquidnet are the only significant block crossing venues
in the US.
According to data
from US boutique broker Rosenblatt’s Let There Be Light, a monthly dark pool
trader, POSIT accounted for around 0.68% of consolidated US equity volumes in March,
compared to 0.22% for Liquidnet’s negotiated service. ITG had an average trade size
of 3,500 shares in March, compared to 44,817 for Liquidnet.
rebranded from its former identity Pipeline after allegations from the
Securities and Exchange Commission in October 2011 concerning improper
disclosure of how trades were executed in its block crossing network.
The firm was
fined US$1 million after the SEC found that the
firm failed to tell 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.
Pipeline then overhauled its
senior management, with the appointment of former Liquidnet and ITG director
Jay Biancamano, and renamed as Aritas, with the aim of repositioning its
business as a technology company.
Aritas’ main buy-side trading
tools – Alpha Pro and the Algorithmic Switching Engine, which jointly use
real-time predictive analytics and market signals to recommend trading
strategies and execution algorithms – were subsequently sold to execution management system provider Portware in
The firm’s European operations
were also wound down in late April, having seen little trading on its system
since its launch in May 2011.