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Barclays in Talks to Sell Automated Options Business to GTS

Viren Vaghela, Nick Baker and Stefania Spezzati

(Bloomberg) -- Barclays Plc is in talks to sell its New York-based automated options trading business to electronic market maker GTS.

Negotiations are at an advanced stage, but there’s no assurance a deal will be struck, according to people familiar with the matter who asked not to be identified discussing private talks. Barclays representatives and a GTS spokesman declined to comment.

Known internally as Automated Volatility Trading, the business buys and sells options to offer liquidity in that market. Its technology and equities heritage make it a natural fit for GTS, which has become one of the largest market makers at the New York Stock Exchange.

Automated Volatility Trading is led by Kirill Gelman, who joined Barclays when the bank bought parts of his former employer, Lehman Brothers. The proposed deal follows calls from activist investor Edward Bramson to shrink risky parts of Barclays’ investment bank.

This isn’t the first time Barclays has offloaded a risk trading desk. In 2014, as it looked to exit businesses that didn’t interact with clients, it spun off its 60-person nQuant unit, a business inherited from Lehman that used algorithms to trade securities. The unit was later renamed Squarepoint Capital.

Barclays generated 984 million pounds ($1.2 billion) of revenue from equities trading in the first half of 2019, down 17% from a year earlier. The firm didn’t break out how much revenue comes from the Automated Volatility Trading unit.

GTS has previously expanded through acquisition. Earlier this year, it bought Cantor Fitzgerald LP’s exchange-traded fund unit, bringing aboard industry legend Reggie Browne. In 2016, GTS acquired a Barclays business that oversees NYSE floor trading for major companies including Berkshire Hathaway Inc., Citigroup Inc. and Walt Disney Co. Earlier this year it hired Michael Piwowar, former commissioner at the U.S. Securities and Exchange Commission, as a senior adviser.

Nimbler firms with superior technology like GTS, Virtu Financial Inc. and Citadel Securities have been replacing banks in some areas of financial markets.

(Adds details in fourth and seventh paragraphs. An earlier version of this story corrected the description of the business in the third paragraph.)

To contact the reporters on this story: Viren Vaghela in London at vvaghela1@bloomberg.net;Nick Baker in Chicago at nbaker7@bloomberg.net;Stefania Spezzati in London at sspezzati@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Keith Campbell

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