05.17.2012
By Terry Flanagan

Pipeline Saga Comes to a Close

Trading and technology provider Portware has acquired certain assets of Aritas Group, formerly known as Pipeline Trading Systems, effectively closing the book on the troubled company.

Under the transaction, Portware will acquire the core technology assets of Aritas, including Alpha Pro, an algorithm switching engine and a portfolio of patents. The switching engine allows traders to switch from one algorithm to another depending on short-term market conditions. Alpha Pro then provides an additional layer of analysis, suggesting certain strategies and algorithms.

“Alpha Pro offers cutting edge analytics,” said Alfred Eskandar, chief executive of Portware. “Customers are looking for advanced predictive analytics which neither Portware, nor any other company, had before aside from Aritas. This was an opportunity for us to combine these cutting edge analytics with our own offerings. These assets will help customers create efficiencies and increase capacity and also help them to capture alpha.”

Aritas executive chairman Jay Biancamano is expected to join Portware in its business and product development group, along with about 20 other Aritas staff. That brings the total workforce at Portware to about 190, according to Eskandar. The transition is expected to conclude by the end of the second quarter.

This is the latest move by Portware to expand its operations. The hire of Eskandar earlier this year was made in order to help the company grow globally. Since then, it has expanded its presence in Asia with the opening of a Hong Kong office, and also begun serving customers in Scandinavia. The company will also look ahead to organic and inorganic growth going forward.

The transaction essentially marks the end of the organization which ran the scandal-plagued Pipeline Trading Systems.

Earlier this year, the company changed its name to Aritas Securities in a move to turn the page on its past transgressions. In November, Biancamano was appointed as executive chairman, replacing the retiring Alfred Berkeley. He was previously global head of marketplace and corporate strategy at Liquidnet, and prior to that a vice-president and director at the newly rebranded ITG.

Berkeley and former chief executive Fred Federspiel, who resigned in November, were fined by the Securities and Exchange Commission a combined $1.2 million. The Securities and Exchange Commission accused Pipeline of profiting ahead of orders that clients had placed at its dark pool, Pipeline ATS. The dark pool had presented itself as a crossing network that matched orders between clients, but in actuality its liquidity was mostly supplied by an affiliate, Milstream Securities, that participated in about 80 per cent of all trades. It has since divested itself of the Milstream subsidiary, per the request of clients.

The broker-dealer operation stopped taking orders last week and will not be a part of the transaction.

Related articles