Japan’s largest brokerage is gradually unlimbering execution services for its new U.S. equities operation.
Almost nine months after acquiring Lehman Brothers’ European and Middle Eastern investment banking and equities operations, Nomura Group has been ramping up its equities staff, products and services–high-touch and low-touch–for Nomura Securities International, its U.S. broker-dealer unit.
Nomura’s ambition is lofty.
“The overriding goal is to be the world’s number one liquidity provider,” said Craig Phares, its co-head of equities in the Americas. “With that in mind, you can’t get there without having a sizeable–if not dominant–presence within the U.S.”
Nomura U.S. equities trading effort isn’t starting from scratch, but its presence here has been small. Before the September acquisition of the assets Lehman Brothers held outside of the U.S., Nomura was predominantly an Asia-focused investment bank, Phares said. When it arrived in North America, Nomura essentially concentrated on marketing and distributing its research product and deal flow that originated mostly in Asia.
Still, the firm has had a presence in New York since 1927, a year after it was founded. And it doesn’t need to make a name for itself today, said Kevin Brady, head of Nomura Securities’ program, electronic and sales trading in the U.S.
“When I came in on the program side and in the electronic businesses, we reviewed where we needed to get added to approved broker lists,” he said. “As a firm, Nomura was already on most of these lists. They may have only been paying us in Japan, but expanding that to Europe and the U.S. has been fairly straightforward, as we have real product and content to offer. This is a bulge bracket firm.”
Nomura plans to leverage the global resources and products they’ve built and road tested in the Asia-Pacific region and offer them to their growing base of U.S. long-only and hedge fund clients. These products and resources include Nomura’s global analytics products, international research products, its order management system and its ability to trade across global markets.
But Nomura’s primary focus for the U.S. branch will be equities execution. And it started its build-out by amassing talent from Lehman and the Street.
The Americas equity execution team has a total of 60 cash, program, futures, electronic and derivative sales and traders today. This is up from the 13 it had in September, prior to the Lehman acquisition, Phares said.
Nomura retained all of the Lehman senior management team it acquired in London, as well as about 95 percent of the general staff, Brady said. Nomura hired a team of options traders from Bank of America to focus on single-stock options, index options and ETFs. It was also able to deploy a good deal of Nomura’s global infrastructure in the U.S., including much of the legacy Lehman technology from Europe and Asia.
Brady himself joined the firm in November from Barclays Capital, after about seven years at Lehman Brothers, where he focused on global program trading. He now works closely with Amit Manwani, another Barclays and Lehman veteran of about eight years. Manwani runs Nomura Securities’ quantitative analytics and algorithmic trading products and is responsible for U.S. systematic trading.
“We’ve added a team to sell European research sales that is based in New York,” Brady said. “We’ve added this options and flow volatility trading and sales teams from Bank of America.”
Manwani said his team will be ready to unveil the firm’s new algorithm suite for clients within six months. Its electronic offering will also include a dark pool, he added. The U.S. products dovetail with Nomura’s global electronic capabilities, Manwani said.
“Here, we have the opportunity to make the U.S. completely consistent with all our global execution product offerings,” he said. “We will be, from the get-go, globally consistent in what we offer to our client base.”
The U.S. equities group also commits capital “for the right clients,” said Lawrence Weiss, who manages the North American program trading desk.
But Phares declined to give trading revenue or volume projections for the Americas team. Nor would he say whether the operation is currently profitable.
“We’ve always participated in U.S. executions, but not on the scale that we plan on getting to,” Phares said. “It’s very, very large. We don’t want our participation in the U.S. to be a distant cousin of our participation in the other exchanges, like Tokyo and the LSE. We want to be a meaningful, relevant piece of the overall pie.”
Nomura plans to build a U.S.-focused research component after its executions services have been unveiled in full.
