Citadel, ex-Goldman unit in deal to create seamless order passage
NEW YORK (Reuters) - A unit of hedge fund Citadel LLC and a spinoff of Goldman Sachs said on Wednesday they will join forces in a bid to create a seamless passage for an order from inception to clearinghouse by bridging the disparate worlds of traders and asset managers.
Citadel Technology and REDI Holdings, a former unit in which Goldman (GS.N) retains a minority state, aim to integrate what have been two distinct areas: an order entry and portfolio management platform that often was viewed as stodgy, with execution services for trading desks that were far more nimble.
There are perhaps a dozen vendors fighting to conquer the gap between portfolio management and trading desk activities, a back-office-type space served by what is being called order and execution management systems.
"We believe we have the winning formula," said Stuart Breslow, managing director of Citadel Technology. Citadel gained a stake in REDI and a seat on its board in the July spinoff.
Breslow said the collective fee pool for order and execution management technology is about $1.65 billion a year.
REDI's main clients are hedge funds, brokers and institutional investors, but registered investment advisers and asset management offices for wealthy families also are potential clients, said Rishi Nangalia, chief executive of the firm.
BofA Merrill Lynch (BAC.N), Barclays (BARC.L), BNP Paribas (BNPP.PA) and private equity firm Lightyear Capital also acquired stakes in REDI two months ago. The ownership breakdown was not disclosed, but Goldman no longer controls the company.
(Reporting by Herbert Lash; Editing by Eric Beech)
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