Barclays Bets on Electronic Trading to Boost Investment Bank

(Bloomberg) -- Barclays Plc is betting on a new electronic trading platform to boost returns at its investment bank just as clients are expected to increase trading via machines.

The British bank is combining equities with fixed income, currencies and futures on the revamped BARX platform, according to Naseer Al-Khudairi, the firm's markets head of global electronic trading who was hired from Credit Suisse Group AG last year. The firm has also doubled its equities team of quants over the past 18 months as it built out a new algorithmic offering for its equities operation.

“You need to have a strong credible electronic offering to be a significant player in equities and it's getting more important each year,” said Daniel Nehren, head of statistical modeling and development for the equities group at Barclays. “We literally built this from the ground up. Fresh ideas, new ways of looking at things, new ways of storing data -- I think that should give us an advantage.”

The move reflects a broader trend across markets that are increasingly transacted by machines with less involvement by humans. Research from Greenwich Associates predicts that buy-side clients will use algorithms to trade 47 percent of their equities volume in North America and 44 percent in Europe by 2021.

The new algorithmic offering for its equities operations will be known as BARX One and will be rolled out in phases in coming months, London-based Barclays said in a statement Tuesday. The revamped platform and the new algorithmic offering should help the bank lower prices through streamlined back-end operations.

“Optimizing execution performance is key,” Al-Khudairi said. “Everyone is trying to get the best price possible at the best liquidity point, for our clients.” Barclays declined to say how much it spent on the new platform.

Barclays is seeking to reverse a 20 percent plunge in equities-trading revenue in the first quarter. The new platform may help it to better compete with U.S. peers that have been increasing market share. Last year marked the first time that American banks had a bigger share of European equities-trading revenue than banks on their home turf.

Barclays Chief Executive Officer Jes Staley is midway through overhauling trading operations. He received a victory last week when he thwarted an attempt by raider Edward Bramson to get a board seat, with shareholders overwhelmingly voting against his appointment at the annual meeting.

To contact the reporters on this story: Viren Vaghela in London at vvaghela1@bloomberg.net;Jenny Surane in New York at jsurane4@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Dan Reichl, Steve Dickson

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