LaBranche Points Capital Overseas

LaBranche & Co., the holding company of the beleaguered New York Stock Exchange specialist firm, is planning to use its cash to grow structured product businesses in the U.K. and Hong Kong. LaBranche ended up with a $269 million war chest at the end of the fourth quarter, up from $148 million in 2006, thanks to a 75% reduction in net capital requirements at the NYSE. The subsidiaries, which were registered two years ago, mainly make markets in ETFs and still make up a “very small” portion of overall revenues, much less than 50%, said Michael LaBranche, chairman, ceo and president on an analyst call Friday. He declined to be more specific about revenues, saying that the company doesn’t break them out in its financial analysis.

“There’s big growth in ETFs in both Asia and Europe and we are going to use capital in those places that are growing,” he said. Most ETF issuers, including Northern Trust, have been focusing their ETF offerings on China, Hong Kong and Korea, where investor appetite has soared with stock market gains. In Europe, German banks alone are pumping out nearly 1,500 new issues a day, according to Celent research.

As for the U.S. specialist business, the company plans to continue improving algorithms and staying the course, though LaBranche cautioned that headcount will not likely go up. There are only 60 specialists on the floor, down from 330 at the height of the boom. There are 97 staffers in the entire division, down from 427 in 2003. Overall headcount was down 40% in ’07. “I think our company’s stock price suffers from the fact that people turn on CNBC and they see the floor empty every day,” LaBranche said.