‘‘We’ve taken on the specialists with the most knowledge and experience and built around that,’’ he says. ‘‘It’s the ecosystem that existed on the floor.’’
Taube, 38, and Lichtenstein, 39, left the Amex in 2000 and formed their own electronic-trading shop. Without a big balance sheet to back them, it ran aground, and in 2006, the pair were hired as managers of ETF trading at Newedge USA LLC, a New York–based joint venture of French banks Societe Generale SA and Credit Agricole SA. Browne by that time was working at market maker LaBranche & Co. When he showed up at a fundraiser for brain cancer research organized by Lichtenstein, who had lost a brother to the disease, Taube and Lichtenstein persuaded him to join them at Newedge.
The Vision
‘‘Darren and I are good at trading, but Reggie had the vision for where the industry was going,’’ Lichtenstein says.
In 2009, the trio says Newedge wouldn’t approve their proposal to open a London office. (Newedge declined to comment.) The three jumped with their entire staff of 10 to Knight Capital. They built that firm into one of the world’s largest ETF traders. At its peak under Browne, Knight handled about 12 percent of all published ETF share volume in the U.S., more than any other firm, trading about 178 million shares daily, according to data from Knight.
As Browne and his team rapidly expanded ETF trading volume at Knight, suitors came calling, including Howard Lutnick, CEO of privately held Cantor Fitzgerald. According to Browne, Lutnick spent 3.5 hours in a Manhattan bar one evening in 2011 trying to pry the trio out of Knight. It didn’t work.
Then came Aug. 1, 2012, when a software glitch spit out erroneous trades that cost Knight more than $450 million, nearly killing it. Knight agreed that December to a takeover by Chicago-based Getco LLC, and the combined companies emerged as KCG in July 2013.
A New Home
With the former Knight’s standing among clients damaged, Browne and his partners began looking for a new home. They needed a firm ready to commit a big portion of its balance sheet to ETFs, and the resources to invest in supporting technology.
Browne says he also wanted the same freedom to run his shop that he had at Knight. Lutnick, he says, had a reputation for allowing new teams to prove themselves. (Lutnick declined to comment for this story.)