TD AmeriTrade Holding Corp. (NASDAQ:AMTD)
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RJ O'Brien & Associates has hired the former head of retail futures trading at MF Global Holdings (MFGLQ), just months after holding discussions to buy the unit from the now-failed brokerage.
Chicago-based RJ O'Brien has emerged as one of the largest players in the U.S. retail futures market after taking over customer accounts from MF Global, long a specialist in the individual trader sector.
The company said Tuesday that it had hired Mark Sachs, formerly president of MF Global's Lind-Waldock retail unit, as executive vice president of sales and marketing. He will build up RJ O'Brien's private-client division and develop new customer outreach efforts across the company.
MF Global had built a market-leading retail presence through a series of acquisitions, but the fallout from its failure depressed volume across the industry because of concerns about client-fund safeguards.
"The shock and awe [of MF Global's collapse] had a near-term impact on retail trading," said Gerald Corcoran, chief executive of RJ O'Brien, in a recent interview. After a sharp slowdown in December, Corcoran said individuals' futures-trading activity in March "is looking to be back to normal."
Corcoran said that last summer his firm held "high-level" discussions about acquiring MF Global's retail franchise, at a time when regulators were talking to the New York firm about increasing its level of capital held for regulatory purposes to cover sovereign-debt trades.
RJ O'Brien wound up securing much of the business at little cost in November, when it took on the bulk of the 36,000 futures-customer accounts shepherded away from MF Global during the first week of November. Since that time the firm has also hired about 125 brokers and staff from MF Global.
Taking on both retail and institutional business from MF Global vaulted RJ O'Brien into 11th place among U.S. futures brokers, ranked by customer assets on deposit, according to data from the Commodity Futures Trading Commission. MF Global's demise added about $2 billion in customer assets to lift RJ O'Brien's total to $3.7 billion by the end of 2011.
"The vast majority of [MF Global's] customers have stayed with us," Corcoran said.
RJ O'Brien's consolidation of retail-level futures business comes as online brokers like TD Ameritrade (AMTD), Charles Schwab Corp. (SCHW) and Tradestation have sought to develop their own offerings, though futures remain much more lightly traded by individuals than stocks, options and currencies.
About 1.2 million individual investors last year actively traded futures in the U.S., according to research firm Aite Group, compared to about 13 million retail traders of stocks and exchange-traded funds.
Futures trades made up an average 7% of daily trading activity among TD Ameritrade customers in the fourth quarter of 2011, up from 5% a year before, according to the company. Stock options in the fourth quarter last year accounted for about 27% of daily trades.
Sachs was president of Lind-Waldock for about 10 years, overseeing one of the jewels in MF Global's portfolio of brokerage businesses. The unit traces its history to 1965; it was acquired by Chicago-based brokerage house Refco in 2000, before that company failed in 2005 and the asset was sold to MF Global.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; firstname.lastname@example.org