Stifel Financial Corp. (SF) hired Brett Marcus and Sam Frankfort of Needham & Co. and Sam Skinner of Jefferies Group Inc. (JEF) as managing directors for the firm’s first expansion into institutional equity options trading.
Marcus, 36, Frankfort, 33, and Skinner, 33, are based in New York and started trading this week, according to Thomas Mulroy, the firm’s co-head of institutional equities and fixed income research and trading. They report to Mulroy.
“There’s plenty of potential for this business to grow dramatically over the next three to five years,” Mulroy said. “We’ve got a huge platform for research and trading and it made sense that if we could find the right individuals that we could add an options business.”
Stifel, which boosted its staff by 51 percent since 2008, is expanding into options after U.S. trading of equity derivatives linked to stocks, indexes and exchange-traded funds rose to 4.6 billion contracts last year for a ninth-straight record. The new staff will make options trades for customers and work with the company’s analysts to recommend strategies based on their projections.
Stifel was “one of the bigger beneficiaries of the market downturn coming out of the financial crisis,” said Devin Ryan, an analyst at Sandler O’Neill & Partners LP in New York, who has a “hold” rating on the shares. “They were well-capitalized and in a position of strength,” he said. “That allowed them to pick up talent.”
Stifel has about 60 equity traders and about 80 research analysts, according to Mulroy, who is based in Baltimore. Most traders are in Baltimore, with some in New York, Boston, San Francisco, Dallas and London, Mulroy said.
Chief Executive Officer Ron Kruszewski said in November that 2012 will be an “up year” for recruiting compared with 2011. Stifel employed 5,097 full-time associates as of Dec. 31, compared with 4,906 at the same time in 2010 and 3,371 in 2008, according to company statements.
“It’s a natural extension of the cash equities business,” Frankfort said. “We’re really looking to leverage the analyst infrastructure here and layer on options strategy, which is something Stifel clients have been asking for.”
Options give the right, without the obligation, to buy or sell a security at a set price by a specific date. Investors use options to guard against fluctuations in the price of securities they own, speculate on share-price moves or bet that volatility, or stock swings, will rise or fall. Listed U.S. options trading began when the Chicago Board Options Exchange opened in 1973. There are now nine U.S. options markets.