ANY CONVERSATION IN the past five years with Richard Korhammer about the business he was building would soon come around to the value of being an independent, broker-neutral firm. Korhammer is CEO of Lava Trading, which he and the firm's chief information officer, Kamran Rafieyan, set up in 1999 to develop smart order-routing systems to combat the increasing fragmentation of US equity markets.
The firm has grown to over 160 employees and now routes trades for more than 20% of orders for Nasdaq-listed stocks.
Independence, Korhammer has argued over the years, has been crucial to the firm's success. Traders, whether at the brokerage houses that form the core of Lava's customer base or on the buy side, get a great deal of comfort routing trades through systems that have no links, hands-off or otherwise, with a major market maker. Last month, though, the firm announced that it was to be bought by Citigroup.
Bizarre move It would seem to be a bizarre move for a firm so committed to independence, especially in an area where brokers have shown themselves to be sceptical of competitors' claims to be able to set up multi-broker platforms.