ITG sees push into equity derivatives

NEW YORK Mon May 7, 2007 10:58am EDT

Robert Gasser, CEO of Investment Technology Group, speaks at the Reuters Exchanges and Trading Summit in New York May 7, 2007. REUTERS/Eric Thayer (UNITED STATES)

Robert Gasser, CEO of Investment Technology Group, speaks at the Reuters Exchanges and Trading Summit in New York May 7, 2007.

Credit: Reuters/Eric Thayer (UNITED STATES)

NEW YORK (Reuters) - Growth for trading services provider Investment Technology Group Inc. (ITG.N) could come from a push into related markets such as equity options, the company's chief executive said on Monday.

"We want to focus on contiguous asset classes: from equities to equity derivatives, to FX, and then beyond," Robert Gasser said at the Reuters Exchanges and Trading Summit in New York.

Gasser said it was unlikely that ITG would "hopscotch" into businesses that were not natural extensions of its current sphere of activity.

"In the United States, going into the derivatives side is where we need to be," he said. "There is a morphing of cash equities and equity derivatives that is starting and will not slow up."

A rise of institutional acceptance of equity options was helping to power options growth, Gasser said.

"Institutions are slowly but surely entering that market ... we're very impressed by the fact that our customers are now asking for that."

In 2006, U.S. options trading rose by 35 percent while the number of shares traded on U.S. stock markets grew by 13 percent. U.S. equity options volume in the first four months of 2007 was up 27 percent from a year earlier.

ITG hopes it can piggyback options and futures functionality onto its existing products, creating an integrated execution capability that "goes beyond the swivel chair model," he said.

In general, Gasser said, the pace of change for equity order execution will only increase over the next year.

Physical trading floors are "seriously challenged right now ... I don't really know what humans are doing down there."

(For more on the Reuters Exchanges and Trading Summit, see <ID:nnN07328661>