Wells Fargo Adds Program Trading as Securities Unit Expands
Wells Fargo & Co. (WFC), seeking to earn more from a sales-and-trading business acquired with Wachovia Corp. in 2008, is building a program-trading group to serve institutional and corporate clients.
The bank hired four executives, including JPMorgan Chase & Co. (JPM)’s Haresh Rana and Michael M. Lee, said Elise Wilkinson, a Wells Fargo spokeswoman. The other additions are Kevin Kennedy from Deutsche Bank AG and Weeden & Co.’s Chris Johnson, 40, who will start the program-trading sales group this month. They’re among 25 executives hired in the past 18 months across sales and trading, which now has about 150 employees.
Wells Fargo is adding specialty services to lure customers including the largest index funds, said Christopher Bartlett, the division’s chief. Program traders handle transactions in baskets that contain at least 15 stocks -- for instance, to help managers of index-linked mutual funds rebalance holdings.
“We have worked on adding a number of capabilities to our equity franchise in an effort to become more relevant to our institutional and corporate client base,” Bartlett, 50, said in a phone interview. “These employees will give us an ability to do a deeper dive into the electronic-trading space with a subset of clients that we weren’t penetrating before.”
Rana, 41, and Lee, 37, joined last month from JPMorgan’s Delta One Trading Group, Wilkinson said in an e-mail. The new hires will be based in New York and report to Matthew Brown, head of cash trading, the San Francisco-based company said today in a statement. Brown joined Wells Fargo in May 2009 from Bank of America Corp. and reports to Bartlett.
Program trading accounted for 28 percent of the daily volume on the New York Stock Exchange in the week ended July 22, and almost 46 percent a month earlier, according to the most recent data available from exchange owner NYSE Euronext.
Banks are competing to hire traders and other executives with expertise in program and automated trading, said Adam Kahn, managing partner at Odyssey Search Partners, a New York-based executive recruiting firm.
“The world’s going more electronic,” Kahn said in a phone interview. “Volumes are down in the equity-options and cash- equities businesses and a lot more of the orders are coming in on the low-touch trading side.”
Wells Fargo must compete for those orders against rivals including New York-based JPMorgan, Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), which was the most active program-trading firm during the week ended July 22, moving 455.5 million shares. Wells Fargo wasn’t among the top 20.
“A lot of the firms like Goldman or JPMorgan are able to command a lot of the order flow,” said Matthew Samelson, founder of Woodbine Associates Inc., a Stamford, Connecticut- based research firm and a former Lehman Brothers Holdings Inc. program trader. “The question for Wells Fargo is how are they going to attract clients? It will be up to them to differentiate themselves because these other firms aren’t going away.”
One way may be by offering a broader array of products and services, Bartlett said. Wells Fargo recently launched WELX, an off-exchange platform that uses computers to match buy and sell orders between retail and institutional investors, and developed 11 algorithmic strategies, he said. The lender also created a listed options business and corporate access desk, according to the statement.
Wells Fargo is expanding an electronic-trading desk called Wells Fargo Advanced Trading Solutions and hired Jason Straus in October from Barclays Capital as a director in electronic- trading sales, Wilkinson said.
“You have to have an electronic business to play the game these days,” Samelson said.
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