Order management system vendor Liquid Holdings plans to offer prime brokerage services early next year.
According to Liquid Holdings chief executive officer Brian Storms, speaking on an earnings call, the firm has been building out our Liquid Prime infrastructure over the last few quarters. The companys plan is to offer the service to emerging and small- to medium-sized hedge funds in early calendar 2014, he added.
Liquid Prime Services is one of the firms broker-dealer subsidiaries that, until June, housed an over-the-counter trading operation. Liquid Holdings, a firm formed last year by former executives from proprietary trading firm ECHOtrade,exited its sales and trading businesses earlier this year, preferring to focus on its OMS business.
In April, Liquid Holdings hired former Goldman Sachs executive Julia Bronson as an executive vice president of Liquid Prime Services. According to regulatory filings, Bronson was made president of the prime brokerage unit in October. Liquid Prime clears through Goldman Sachs Execution & Clearing.
It is not unusual for suppliers of order management systems to also offer prime brokerage services. Convergex offered both until it sold off its Eze Castle unit this year. Also, a few of the larger brokers provide their customers with execution management systems as well as prime brokerage services.
Liquid Holdings was formed last year as a holding company with numerous businesses by Brian Ferdinand, an ECHOtradepartner and its New York branch manager, Robert Keller, former chief operating officer at ECHOtrade, and former NYMEX chairman Richard Schaeffer. It went public in July. Its first chief executive, trading technology veteran Sam Gaer, left the firm last December. Storms joined in February.
In the first nine months of the year, the company took in about half of its $4 million in revenues from its brokerage operation. The rest came from software sales. A single customer, QuantX, a hedge fund affiliated with the founders, accounted for much of those software sales.
The technology was developed by Green Mountain Analytics, a onetime affiliate of ECHOtrade, now owned by Liquid Holdings. The company is marketing a combined order, execution, and risk management system to hedge funds and other asset managers as a hosted service. Instead of installing the software on their own servers, users will contract for access to the technology on Liquid Holdings cloud.
CEO Storms told analysts that Liquid has the potential to revolutionize the hedge fund industry by offering a cloud-based platform to manage the entire trade life cycle in real-time.
He also noted that delivery of the product is efficient and pricing is competitive and disruptive.
Liquid Holdings had 48 customers taking 565 units at the end of the third quarter, according to company officials. QuantX accounted for 391 of those units.
