Trading Technology

12:37 PM
Ivy Schmerken
Ivy Schmerken
Commentary
Connect Directly
Facebook
Google+
Twitter
RSS
E-Mail
50%
50%

Pipeline Transforms Itself into Aritas

Yesterday, the former Pipeline Trading Systems said it's new name is Aritas, citing many changes, including product updates and leadership, it's made since it reached a settlement with the SEC.

After surviving a media storm in the past three months over an SEC settlement disclosing that buy side orders were matched outside of its dark pool with an affiliated trading entity, Pipeline Trading Systems LLC is looking for a second chance.

The company said yesterday that it has changed the name of the business to Aritas Securities LLC, replacing Pipeline Trading Systems. The new identity is the culmination of a number of steps it has taken since a settlement was announced on Oct. 24 with the SEC requiring it to pay a $1 million fine for violations related to Reg ATS and the confidentiality of customer information.

Here are the major steps:

After severing ties with senior management (a.k.a. Fred Federspiel, a founder and CEO and Alfred Berkeley, its former chairman), the board hired Jay Biancamano in November as executive chairman to restore credibility with institutional customers and get the business back on track. The company also discontinued operations of its controversial affiliate Milstream Securities, a wholly owned trading entity that traded against buy-side order flow without their knowledge and matched 80 percent of the orders in Pipeline’s BlockBoard ATS. Management has also completed work on a new version of its product Alpha Pro, updated its Algorithm Switching Engine and reorganized its internal structure.

In the European Union, Aritas Financial Ltd. will succeed Pipeline Financial Group Ltd., where it will offer updated versions of Alpha Pro and the Algorithmic Switching Engine.

Aside from revamping its products, the company is counting on new leadership under Biancamano to rectify mistakes from the past and chart a new path.

“Of all that we’ve done here in the past three months, the most important thing is to dedicate ourselves to doing business with the utmost integrity,” said Aritas Executive Chairman Jay Biancamano. “Pipeline created great, game-changing technology, and clients continue to see the value in that technology. With a fresh commitment to serving our customers transparently, Aritas will offer them a new opportunity to take advantage of our unique offerings. The popularity of Alpha Pro was growing rapidly prior to Pipeline’s SEC agreement. We believe we can regain that momentum and build on it in 2012.”
Aritas Financial Ltd. is also looking to regain momentum in the European Union where it will offer a multilateral-trading-facility (MTF) block liquidity, not related to the ATS in the US.

Obviously, the board of directors is eager to put the past behind it. But can a new name erase this painful episode? That’s a difficult question. It will be interesting to see if institutional traders feel comfortable enough to trust their order flow to the new Aritas. In the meantime, Aritas continues to operate its ATS "as an alternative to blotter scraping" — which is a reference to Liquidnet. But will Aritas be prepared to scrap its U.S. equities dark pool if it doesn’t attract enough liquidity? In a previous interview shortly after he was appointed executive chairman, Biancamano said that Pipeline generated about 30 percent of its revenues from the ATS and 70 percent from software. While Aritas software products, AlphaPro and the algo switching engine, are evidently most important to its future revenues, the company's future will depend on regaining trust with clients.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
Shared Reporting Services on the Horizon, Genpact Predicts
The financial services industry is starting to adopt shared services, resulting in reasonable impacts to the bottom line. Genpact expects a push for reporting efficiency will come next.
Don't Let the Cloud Rain on Your Operations Strategy Parade
Avoid migrating large applications all at once to minimize risk during a cloud project.
Could Intel Lose Data Center Market Share to ARM Chips?
ARM chips could be an alternative for certain purposes in the datacenter, but many questions have to be answered before they pose a threat to Intel's market dominance.
Cost to Trade: Hey, Banks, Itís Time to Face the Music
Why is calculating the cost to trade so difficult for banks? The answer is as complex as the calculations themselves.
M&A Activity Will Continue to Grow in 2015
Data shows that the M&A market continues to improve, and forecasts indicate deal making will be healthy in 2015.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - Elite 8, October 2014
The in-depth profiles of this year's Elite 8 honorees focus on leadership, talent recruitment, big data, analytics, mobile, and more.
Video
Exclusive: Inside the GETCO Execution Services Trading Floor
Exclusive: Inside the GETCO Execution Services Trading Floor
Advanced Trading takes you on an exclusive tour of the New York trading floor of GETCO Execution Services, the solutions arm of GETCO.