Magazine article American Banker

RBC Direct-Access Player with Acquisition of Carlin

Magazine article American Banker

RBC Direct-Access Player with Acquisition of Carlin

Article excerpt

With its acquisition of Carlin Financial Group, Royal Bank of Canada's RBC Capital Markets joined the ranks of Wall Street firms with proprietary desktop trading platforms that give customers cheap, direct access to financial markets.

RBC Carlin, the unit created from the Jan. 3 buyout of the New York firm, owns a front-end system that lets emerging hedge fund managers, professional traders, and financial institutions trade stocks and options without a broker through a simple interface.

Jeremy Frommer, RBC Carlin's president, said it expects by around midyear to add the ability to trade futures.

"We are moving to an environment where the higher-end firms on the Street must be able to provide a full suite of services to their clients," he said.

In addition to traditional services like brokerage and research, that suite will include direct-market-access (DMA) platforms that provide entry to exchanges, alternative trading systems, and electronic communication networks, said David Easthope, an analyst with Celent LLC.

"RBC, like many investment banks, is seeing clients trying to tap into the market in different ways," Mr. Easthope said. "If I am a small firm wanting to invest across the board in search of return, this gives me one tool to get in and out of asset classes."

Direct-market-access platforms allow customers to execute high-volume, rapid-fire trading that can be based on algorithms. RBC Capital Markets has a library of these algorithms that can be used in conjunction with Carlin's DMA front-end platform, Mr. Frommer said. Carlin has its own algorithms as well.

What also makes DMA trades appealing is that they often cost a fraction of what brokers charge, Mr. Easthope said.

RBC Capital Markets' decision to offer the service is partly defensive. Mr. Easthope said the New York company knew some of its customers were using DMA, so an acquisition was a way to avoid losing business. …

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