LaBranche & Co., in a move that will transform its institutional brokerage subsidiary, has authorized the unit to commit capital. As part of the revamp, the firm has installed a new leader. Michael O’Hare, formerly head of trading at JP Morgan and, before that, of Lehman Brother’s block desk, will lead a retooled LaBranche Financial Services. His title is head of equity trading and sales. The seasoned executive brings risk-taking experience and a Rolodex filled with top buyside customer names with him. He replaces Greg Cavallo, who recently retired. “We are shifting our focus,” O’Hare told Traders Magazine. “Because of the fragmentation of the marketplace, we are getting into the capital commitment business.” O’Hare explains that getting large trades done has become harder since much of the trading in New York Stock Exchange-listed names has migrated from the New York to several other venues. The brokerage will initially trade stocks in the financial, energy, consumer retail and technology sectors. LaBranche, best known as a NYSE specialist, has run the institutional brokerage since 2002. In the first nine months of last year, the unit accounted for $16.5 million of the entire company’s $78.4 million in revenues. The unit posted a $6 million loss for the period. Up until now, the firm primarily handled trades on an agency basis. Now, in committing capital, the firm’s profile more closely resembles that of LaBranche’s specialist unit. NYSE specialists’ profits come largely from taking the other side of incoming orders. That was true historically anyway. Opportunities to trade against the flow have waned in the past year as increased electronic trading at the New York has curtailed specialist participation in trades. That has led to lower specialist profits. O’Hare began his career after college with NYSE specialist firm Robb Peck McCooey. He joined Lehman Brothers in 1990 as junior trader, eventually rising to head of the block desk. O’Hare spent 16 years at Lehman. He moved to JP Morgan in April 2006, departing recently. As a long-time block trader, O’Hare’s specialty is assuming the risk of his customer’s trades. “Portfolio managers need to get volume done,” he said. “We will provide the liquidity.”
