NEW YORK (Reuters) - Lightspeed Trading, a New York-based retail trading platform for active traders, anticipates sales doubling within two years through acquisitions as the firm lures more traffic from these traders and small and mid-sized hedge funds.
The company, purchased from E*Trade Financial Group (ETFC.O: Quote, Profile, Research, Stock Buzz) in 2006 by CEO Stephen Ehrlich, who had earlier headed E*Trade's professional trading arm, and his management team, averages 150 million shares a day, a three-fold increase from a year ago. The company has annual sales of about $100 million a year, with a profit margin of roughly 15 percent.
Speaking at the Reuters Exchanges and Trading Summit, Ehrlich said that active traders, including people who make their living by trading, are an untapped market, ignored by the large discount brokerages E*Trade, Charles Schwab Corp (SCHW.O: Quote, Profile, Research, Stock Buzz) and TD Ameritrade (AMTD.O: Quote, Profile, Research, Stock Buzz), unable to provide the labor intensive customer service he says they want.
"It's a very hands-on business," he said. He estimates the market could be as high as 40,000 traders.
Ehrlich, whose company competes with Redi and technology company Real Tick in this niche, said the company is not actively in discussions to be acquired but does not discourage potential suitors.
"We are open to any ideas," said Ehrlich.
To build up its value, the company is launching a $750,000 advertising campaign. And Lightspeed has also made acquisitions of its own, such as Integrity Trading, a Kirkland, Washington-based broker dealer in January.
Ehrlich said the company typically pays the equivalent of a company's annual sales figure when making acquisitions and guesses Lightspeed could fetch a slightly higher multiple.
(For summit blog: summitnotebook.reuters.com/ )
(Reporting by Phil Wahba, editing by Phil Berlowitz)
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