Hudson Securities, which has built its business as a wholesaler, is pushing its way into the institutional agency trading space.
The Jersey City, N.J.-based firm added seven new sales traders from Schonfeld IBS to the 13 already there, and is still hiring. The sales traders arrive from Schonfeld’s institutional arm-not from among its day-trading unit, said Marty Cunningham, chief executive of Hudson Holding Corp., Hudson Securities’ parent company.
Hudson also has been adding to its research product for buyside clients since February, when it acquired Westminster Securities, a banking and research firm that is not affiliated with BNY ConvergEx’s Westminster Research Associates. Together, the additions form the core of its transformation into an independent institutional broker, Cunningham said.
“We have a pretty strong foothold,” he said. “And based on the Schonfeld [traders] coming on, we represent–based on pay structure, quality of life, the technology that we have in place–a viable option not just for potential new recruits, but for clients who want to pipe into us.”
Hudson set its sights on the institutional business space a couple of years ago, Cunningham said. Today, the space is crowded, and growing.
For the past couple of years, sales traders have been leaving full-service firms for “eat what you kill” institutional brokerages. The turmoil at the investment banks only aggravated the trend of sales traders and other investment professionals on the move.
Hudson is following many independent firms that have been bulking up their sales trading numbers in the last year or so. Still, Cunningham said Hudson has several selling points that should help distinguish it from its rivals.
“There are, to a great degree, fewer and fewer people out there who are executing client business,” he said. “We believe that we’re one of those, and that we’re substantive.”
Hudson stands on its reputation of its early institutional hires, such as Dave Scialabba, from E*Trade’s institutional unit, who was tabbed two years ago to perform the same role at Hudson. The institutional effort is primarily agency, but in some situations, Hudson will commit capital, Cunningham said.
The firm acts on a principal basis in its market-making group, where it trades more than 15,000 names. However, to entice the buyside, Hudson believes that its advantage is its broker-dealer order flow, which can interact with institutional orders to provide greater liquidity, Cunningham said.
In addition, the Westminster purchase also brings some banking and research products. Westminster specializes in the energy, alternative energy, natural resource, pharmaceutical and technology sectors, with a particular focus on China.
