Assets of ProTrader sold
By Matt Hudgins
Austin Business Journal
Jul. 7 — A New York brokerage company has purchased the assets of Austin's ProTrader Securities Group LP for an undisclosed amount.
Visitors to the ProTrader Web site are directed to the site of the company's new parent, New York-based ETG LLC. An announcement on that site indicates ETG acquired ProTrader's assets from Instinet Group Inc. in a deal that closed June 13.
Most of those assets consist of about 400 customer accounts and the day-trading staff of the Austin office, which is dropping the ProTrader tag to operate under the name ETG.
ETG has about 23 offices nationwide, according to the company Web site.
Jeffrey Mester, president of ETG, says he plans to keep the Austin office open under the direction of current local executives.
"We have every intention of keeping and perhaps growing that office," Mester says. "We have no plans to transfer any executives there -- we have confidence in Laura Horne and her entire staff in Austin."
Horne is director of customer services for ETG in Austin. The local office has retained its downtown offices at 504 Lavaca St., where it has a dozen employees and a little more than 30 traders.
ETG hasn't acquired all of ProTrader, however. The sale excluded a technology division that remains part of Instinet, which bought ProTrader in October 2001 for $150 million.
Executives at Instinet's New York headquarters decline to comment.
Sources say Instinet likely will maintain an Austin presence with what was the technology development component of ProTrader, which also has dropped the ProTrader name and now operates under the Instinet brand.
Instinet is an electronic securities broker, providing a trading platform and clearing and settlement services to client brokerages like ETG. Analysts have said Instinet purchased ProTrader primarily for the company's technology.
The brokerage business that Instinet acquired along with ProTrader's technology, however, made Instinet a rival to its own clients. By selling that business to ETG, Instinet eliminates that competitive element and is able to continue providing clearing services to ProTrader's clients as a service to ETG.
But analyst Todd Halky of Putnam Lovell NBF Securities Inc. in New York says Instinet initially intended to expand ProTrader's trading business. Other companies such as ETrade Group Inc. and Ameritrade Inc. made similar acquisitions at the time to expand their stake in the trading business.
"Times have changed," Halky says. "When [Instinet] did the transaction, they had high hopes for the professional trading space, and they're not the only ones."
Halky says there's been a mass exodus from day trading since then, however. What Instinet carried away from its two-year ownership of ProTrader is a software system that Halky says competes well in the upper echelon of brokerage portals.
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