A NEW LOOK.
Robert Boardman, managing director and chief executive officer at ITG explains why the company had to change its image.
What was the driver behind the rebranding and new logo and name?
The idea for the new brand arose from the company’s impending 25th anniversary, as well as the recent research acquisitions. We wanted to demonstrate that we were no longer just an execution only broker but a full service firm and the new identity reflects that change. Our main tagline is now ITG but to be honest very few people referred to us as Investment Technology Group. We have also introduced a series of themes which come under the tagline – ‘Decoding Signals from the Noise. ‘ One of the greatest challenges today is that markets produce stunningly large amounts of data especially from the ticks on the exchange and it is a logistical as well as technical challenge to keep your head above water. Our tagline though illustrates what we can do. It shows the firm has insight into markets, can sift through significant amounts of data and present actionable ideas to clients whether it is on the research or execution front.
Has the new image helped?
I think it has helped clarify ITG’s statement of intent both internally and externally. We wanted to emphasise the synergies of both sides of our business not only to our clients but also to the people who work in the organisation. Usually people are quite cynical about re-branding but we have had a really positive reaction from our institutional clients. The themes have also engaged people and got them talking and thinking.
For many years the firm was execution only. What was the reason for branching out into research?
ITG’s board decided in 2010 to diversify the business by moving into research and in October of that year we bought Majestic Research followed by the Ross-Smith Energy Group last year. Our sectors include TMT, Consumer, Healthcare, and Energy, and while our focus is currently largely on US equities, there are efforts underway to expand into China by Q2 and into Europe by the end of the year. There was good logic for entering into the alpha generation space in that we wanted to appeal to different clients in the investment cycle. We have always been well understood by heads of trading at large asset management firms around the world but not that well understood by portfolio constructors and we wanted to make a better connection with them.
Our research culture is different than some firms in that we don’t have a cult of celebrity. It is not our game and we didn’t want to copy that model. The companies we bought wanted to expand outside of their home markets and they fit our model in that they are data driven, empirical and have the seeds of growth. We will continue to invest into research and build the offering out over time. At the moment, we provide research on over 300 companies in 15 industries.
I also see you are expanding into different asset classes. Can you provide some more detail?
As part of its diversification strategy, we have been moving into other asset classes because there are a lot of opportunities in the different spheres of asset coverage. The firm is trying to grow up relatively quickly but we have no aspirations to be a bank or be involved in any capital-intensive parts of the business. We are planning to launch a FX TCA product in the second quarter which will provide information around the market impact and trading costs associated with a client’s FX trades. This was partly driven by our dominant share of TCA in equities and clients were asking us to build a product that helped them measure foreign exchange costs and could potentially change trading strategies and tactics.
We have also been slowly and steadily building a derivative business off the acquisition of RedSky Financial, a US based broker-dealer five years ago. While the derivatives market is big and sophisticated, we are focusing on exchange-traded equity derivative products such as equity indices, bonds and rates. In the future we are looking at building out commodity derivatives such as metals, grains and soft agriculture.
What impact do you think regulation will have especially on dark pools?
There is so much talk and political debate about dark pools and what could happen. I believe regulations are on their way but I can’t predict precisely what and when. I do think though that the European Parliament is comfortable delegating the micro matters to ESMA who is on the ground and has appointed a competent body. The concern is if the rules are over prescriptive and the fact is that if you apply evidence-based assessments on the impact of dark pools on the market you would leave them alone. However people are so worried that dark pool might someday account for 90% of the market which is so far from the truth. They only account for a small percentage of volumes.
Turning the attention away from Europe, can you provide some detail on your plans in Asia?
We opened an office in Sydney in the mid-1990s and have grown steadily since then, most recently launched a dark pool for trading Japanese equities last year. Asia is clearly a region that has benefitted from macro trends over the past decade and the market cap of Asian equities has recently exceeded Europe for the first time ever. It is a wake-up call to anyone who thinks the region is a backwater and explains why so many financial firms have made it one of their focus areas. It is though a very different market than Europe in that it has multiple markets, time zones, currencies, regulatory issues and technology infrastructures.
We have just spent the past 12 months trying to make ourselves more efficient and to prepare for the electronic trading growth opportunity. We have pioneered new offerings such dark pools, aggregators, algos and introduced our core product services that have done well in the US and Europe. They are gaining traction in Asia but nevertheless it is not an easy place to do business. You really have to prove yourself.
Other future plans?
I see the firm going back to its innovative roots and we are encouraging our employees across the board to become much more entrepreneurial. In the execution space, we will continue to work on developing our execution offering, improving the ability of algos to cross with each other and enhancing our TCA products.[biog] Since 2010 Rob Boardman has been CEO EMEA for ITG. Prior to his current role Boardman was head of electronic trading and head of algorithmic trading sales for ITG in Europe. Prior to joining the firm in April 2006, Boardman spent 12 years at Goldman Sachs in various positions, including executive director on the electronic transaction services sales team and head of connectivity for the equities division. Boardman has an undergraduate and post-graduate degree in particle physics from Oxford University. ©BestExecution