Asset manager BlackRock Inc plans to create its own global trading platform which could help save its clients significant amounts of money in trading fees. New York-based BlackRock, set to become the world's largest money manager with roughly $3 trillion in assets when it buys Barclays Global Investors (BGI) later this year, is in the early stages of developing the platform, it said in a memo seen by Reuters.
Minder Cheng, who came to BlackRock through the planned BGI acquisition, has been appointed to lead the development of a "new world-class global trading platform across the firm," it said. The platform will "fully realise the cost efficiencies and trading opportunities across all asset classes as we become one of the largest trading operations in the world", the memo said.
BlackRock's plans were first reported by the Financial Times. Traditionally, asset managers like BlackRock rely heavily on Wall Street firms like Goldman Sachs to trade securities for them. Some of the asset management industry's biggest players have recently balked at the trading fees Wall Street banks can earn and begun work on setting up their own platforms to cut costs.
In BlackRock's case, the new platform would allow the company to cross its clients' trades internally thereby saving them money. The company would also continue to use Wall Street firms to provide liquidity.
The company, which survived the financial crisis better than many rivals thanks to its strong focus on risk management, already owns powerful technology to run its lucrative BlackRock Solutions unit which make it easier to launch the new project. Founded 20 years ago as a bond investment firm, BlackRock is well-known for working with institutions and governments.
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