Traders were left bemused last week when it emerged that a mystery trading firm had unseated Goldman Sachs to become the number one player on the New York Stock Exchange's closely watched program trading list during the last week of September.
Financial News has found that, at the same time as Latour Trading was rising up the NYSE list, another unknown trading company, Spire Europe, took the No. 2 spot on Nasdaq OMX's Nordic market for September.
We have also discovered that the similarity in the names of the two firms and the timing of their ascent is no coincidence.
According to NYSE's weekly report, Latour Trading was the most active firm on the list for the last week of September and the first week of October, trading some 484.6 million and 568.8 million shares respectively. The list, which breaks out principal trading, is used by market-watchers as a proxy for the most active proprietary trading desks. Proprietary traders are traditionally a secretive bunch due to the highly competitive nature of their strategies.
According to Nasdaq data, Spire was second only to Getco, the well-known Chicago-headquartered firm, among high-frequency players during the month by market share, and the 11th-largest provider of liquidity overall. It traded equities worth EUR3.6 billion.
According to filings with the U.K.'s Companies House and the U.S. Securities and Exchange Commission, both firms are wholly owned subsidiaries of Tower Research Capital, a New York-based hedge fund that specialises in high-frequency trading strategies. These firms typically use their own capital to trade large volumes across markets in a fraction of a second using sophisticated technology.
Tower Research Capital was founded in 1998 by Mark Gorton, who had worked in the proprietary trading division at Credit Suisse. The company hit the headlines last year during the trial of Societe Generale trader Samarth Agrawal who was convicted for stealing proprietary trading code from the French bank. Agrawal was leaving SocGen to join Tower Research.
According to SEC filings, Latour was founded in 2009 and is also active on the Chicago Board Options Exchange. The company, which occupies a floor of the same Broadway building as Tower Research, employs one person thought to be the company's chief executive, David Faucon. Faucon helped build the high-frequency trading desk at Societe Generale.
Spire was first established in 2006 but only began trading in 2009. According to sources familiar with the matter, Spire is active on Chi-X Europe, while public data shows it is also active on the London Stock Exchange , NYSE Euronext and the Swiss markets.
Scott Johnston, Tower's chief operating officer, confirmed that Latour and Spire are SEC and FSA-regulated subsidiaries respectively and added: "Latour is a member of most US equity exchanges and is a registered marketmaker on Nasdaq, Arca and Bats. Spire Europe is a member of, and marketmaker on, European equity exchanges and MTFs."
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