Bloc Trading Russian Style
Russian firms gives U.S. Investors access to its frontier markets
Traders Magazine Online News, January 27, 2012
Moscow-based agency-only broker-dealer Otkritie Capital is breaking into the U.S. marketplace, offering U.S. institutional clients and high-frequency traders access into the equities markets in Russia and other former Soviet countries.
While the firm is relatively new to North America, and has been around for more than 15 years, its roots began in the U.S. The firm was founded by Vadim Belyaev, who was working in the U.S. and observed how brokerage Charles Schwab operated in the early 1990s. He exported the U.S retail brokerage model he'd seen back to Moscow and established Otkritie in 1995. The goal was to offer the Russian people direct investment opportunities in their own local firms at low cost.
Luis Saenz
According to the Russian Trading System, a total of U.S. $5.7 billion worth of equities changed hands as of the January 24 market close. That equals a market capitalization of U.S. $806 billion.
"Our initial clients were retail, and Belyaev liked the model of direct market access and the execution model in the U.S. and brought it to Russia," said Luis Saenz, chief executive officer at Otkritie in New York. "At that time, we were based in Moscow and kept a retail consumer focus."
But Otkritie wasn't satisfied with servicing only retail clients. In 2007 the firm became an investment bank and turned its attention to getting U.S and European hedge fund and other institutional trading flow into Russian equities and growing the firm's commissions. Saenz said once the firm solidified itself as a retail-focused brokerage providing access to Russia, Ukraine and Kazakhstan, it wanted to hunt for big game institutional investors. And that was something the six sales traders based in Moscow needed help with.
Enter Saenz, a 12-year financial market vet who has spent a part of his career focused on the Russian marketplace. Saenz got his start in the business as a relationship manager for the investment bank business at Deutsche Bank in New York, focusing on South American clients. He also worked at Dresdner Kleinwort Wasserstein.
He joined Otkritie in 2009 and was charged with building out the firm's London office. The office grew from six people in 2009 to 40 in 2011.
"It was a small office, really like a closet," Saenz said. With only a small staff, including two sales traders and four in research sales, the build-out began. Out of that office, he built out the firm's international trading platform. "Our goal from there was to provide global institutional clients with access to the Russian and CIS - Commonwealth of Independent States markets."
While in London, Saenz and his team began trading with institutional clients across the U.S. and Europe, such as hedge funds, mutual funds and a handful of high-frequency trading firms. Otkritie, with its niche focus on the emerging CIS countries, was able to exploit its local strength and execute trades while its larger competitors, he said, chose to focus on other markets and products. The firm also commits capital on behalf of its clients.
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