The team hire also includes the recruitment of Brad Manuilow in San Francisco – he is also from Newedge and specialises in technology companies. And three sales traders have joined from Pali Capital, the crumbling boutique investment bank: James Murphy, Robert Mabry and Jeffrey Fittipaldi.
Newedge declined to comment. Pali has been struggling to find a buyer amid mass departures of its senior executives, but announced a week ago that it planned to close.
Knight wants the options team to cover Europe as well as the Americas, and expects to announce a hire in London soon.
Reginald Brown, co-head of listed derivatives at Knight Capital in Jersey City, New Jersey, told FOW: “We made this investment because options usage is growing by 20% annually. We also think listed options on exchanges will grow away from the counterparty risk [of banks]. We are the market leader in trading US equities, so it is only natural to offer an options execution platform.”
Since 2005 Knight has offered direct market access (DMA) to the US options exchanges, but it is now adding the human side, with an eight person strategic options team.
The unit’s leaders, Adam Templeton and Ryan Sylvester, have worked together for several years – Sylvester recruited Templeton from JP Morgan to work with him in sales trading at Pali Capital.
In January 2008 Templeton and Sylvester moved together to Newedge to be co-heads of strategic options.
Asked why he and Templeton were now moving to Knight, Sylvester said: “We were really excited about the equity offering here. Knight is an equity firm, they are the leader, and we trade equity and index options. Our clients are very interested in the flows that go on here.”
Sylvester said that “to really enhance the liquidity and execution” Knight can offer, they had picked what he thought were “three of the top guys on the desk” at Pali.
Knight’s new options team will have two product lines. The first is institutional execution, focusing on portfolio managers and traders with wide experience of trading options. “We aim to do a good job helping them source liquidity,” said Sylvester. “We have 80 upstairs calls [to broker-dealers and others who execute options].”
The other product line, dubbed options strategies and analytics, is aimed at clients who are not as well versed in the market. Knight aims to act as an extension of their desks, helping to make sure they take full advantage of the product.
“This team has 25 years’ experience of executing options for institutional users,” said Brown. “We are agency-only. We think this offering will be competitive with the banks who use their own capital to trade.”
Brown himself joined Knight only in June last year from Newedge, along with his co-heads of listed derivatives, Darren Taube and Eric Lichtenstein.
Jon Hay +44 207 779 8372 jhay@fow.com