Barclays to Sell Automated Options Trading Business to GTS


(Bloomberg) -- Electronic market maker GTS agreed to buy Barclays Plc’s automated U.S. options trading division.

About 40 Barclays employees will join GTS as part of the deal, according to a statement Wednesday. They include Kirill Gelman, who will continue to run a business that quotes prices for more than 735,000 securities and handles about 2% of exchange-listed U.S. equity options volume.

Banks such as Barclays used to play a bigger role making markets on exchanges, but they’ve been muscled out by high-frequency trading firms including GTS, Citadel Securities and Virtu Financial Inc., whose focus on speed and efficiency gives them an edge. GTS, with help from a previous takeover of a Barclays division, is one of the largest traders on the New York Stock Exchange.

“We looked at virtually every options business that had material size and a solid reputation, and decided this was the New York Yankees of options,” Ari Rubenstein, co-founder and chief executive officer of GTS, said in an interview. “The principals of this team have operated impeccably together for over a decade. It’s one of the few price-making businesses left at a bank that’s impressive.”

Barclays generated 1.48 billion pounds ($1.95 billion) of revenue from equities trading in the first nine months of 2019, down 11% from a year earlier. The firm didn’t break out how much revenue comes from the Automated Volatility Trading unit.

“Barclays did a really good job continuing to invest in this business,” Rubenstein said.

A Barclays spokeswoman declined to comment. Bloomberg News reported in August that Barclays and GTS were negotiating a deal.

The transaction adds equity options to the roster of assets GTS trades, a list that already included stocks, exchange-traded funds, Treasuries, futures and currencies.

The New York-based firm bought Cantor Fitzgerald LP’s ETF unit earlier this year, bringing aboard industry legend Reggie Browne. In 2016 it picked up a Barclays division that now oversees NYSE floor trading for major companies including Exxon Mobil Corp., Alibaba Group Holding Ltd. and AT&T Inc.

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