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Barclays Mulls Divesture of Automated Options Trading Unit

Zacks Equity Research

Per an article by Bloomberg, Barclays PLC BCS is likely to divest its New York-based automated options trading business to GTS — a leading electronic market maker across global financial instruments.

GTS combines market expertise with innovative and proprietary technology. It leverages the latest in AI systems and sophisticated pricing models to bring consistency, efficiency and transparency to markets. GTS accounts for 3-6% of daily cash equities volume in the United States and trades more than 10,000 different instruments globally.

The concerned business — Automated Volatility Trading — led by Kirill Gelman, involves buying and selling of options in order to keep market liquid. The article reported that the deal is a result of activist investor Edward Bramson’s demand to shrink risky parts of Barclays’ investment bank.

Though divesture talks are at an advanced stage, there is no guarantee that an agreement will be signed, the article said citing people familiar with the matter.

Barclays has been striving to simplify operations and focus on core businesses over the past few years. With this aim, the company restructured its business lines into two divisions and divested/closed several non-strategic and less profitable operations globally.

Also, it remains focused on building digital capabilities.

In May, it launched a revamped electronic trading platform, which combines equities, fixed income, futures and FX. The newly integrated, cross-asset BARX platform uses the bank’s data science tools for trade analytics, provides liquidity for each asset class and offers e-trading solutions and innovations to clients.

Notably, the company’s restructuring and business simplifying efforts (including ring-fencing) are expected to continue improving efficiency and support profitability.

Shares of Barclays have lost 11.4% so far this year compared with the industry’s decline of 5.2%.

Currently, the company carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the finance space are The Toronto Dominion Bank TD, BanColombia S.A. CIB and Credit Agricole SA CRARY. All these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Toronto Dominion’s earnings estimates for 2019 have been revised 1.8% upward over the past 30 days. Also, its share price has increased 8.8% so far this year.

Earnings estimates for 2019 for BanColombia have moved up 2.7% in the past 30 days. Its share price has risen 30.4% year to date.

The Zacks Consensus Estimate for the current year for Credit Agricole has remained stable in the past 30 days. The company’s share price has jumped 5.4% so far this year.

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