DriveWealth buys US floor trading firm

Darren Sinden

30% of the DriveWealth’s orders in Q4 2020 were placed outside of normal trading hours

NYSE

A US fintech company has taken the unusual step of buying an NYSE floor trading firm known for servicing the institutional market place.

DriveWealth, which provides infrastructure and support to a cross-section of financial institutions and other B2B customers has acquired Cuttone & Company, which now will form the institutional division of Drive Wealth Holdings.

The new division will be headed by Donato J Cuttone. Cuttone & Co was founded in 1984 and provides institutional execution on the NYSE and all other US equity exchanges and alternative trading venues.

Mr Cuttone is a member of the NYSE and is an advisor to financial services companies with expertise in ultrahigh-frequency trading, workflows and compliance.

DriveWealth has created what it calls a global full-stack, cloud-based, and API-driven solution. An infrastructure that allows new or existing financial services businesses to quickly access cutting edge technology and solutions without the need for extensive in house development

For example, Fracker is the companies API driven cloud-based brokerage solution that has been designed specifically to facilitate the latest trends in retail trading, Such as fractional share ownership, Robo advisors and so-called round-ups in which the “change” from consumers online transaction are channelled into savings and investment accounts.

Back in October last year, DriveWealth secured $56.7 million in Series C funding in a round that was led by Point 72 Ventures. Part of Steve Cohen’s former hedge fund turned family office. That took the companies external funding to just over $100 million raised since 2018.

At that time Drivewealth founder and CEO Bob Cortright sad that the company had seen: “its partners open more accounts in 2Q than E*Trade, Schwab and TD Ameritrade combined, and 3Q saw a 33% increase over 2Q”

DriveWealth’s platform is behind many well-known brands including challenger bank Revolut’s online trading account, and the company now wants to expand its offering further into the institutional space. Hence the acquisition of Cuttone and Co which provides DriveWealth with access to algorithmic execution capabilities, prime brokerage services and options trading

Last week DriveWealth published an update on its Q4 2020 activities which saw records in account openings, asset growth, number of trades and overall volume traded for the business. and its partners.

The report also highlighted some interesting trends within the firm’s order flow. Most notably that 30% of the firm’s orders were placed outside of normal trading hours. Something that DriveWealth believes shows that retail traders are not day trading or trying to time the market.

Though they could be trying to take advantage of some longstanding anomalies in the performance of US equity indices in and out of hours.

Embedded finance is the term that DriveWealth uses to describe the market place that it addresses, and its a market that is being driven by new younger investors. The fact that 48% of the new accounts opened in DriveWealth’s network, in Q4 2020, were opened by traders under the age of 30 and that 78% of the accounts were opened by traders under the age of 40 is testament to that.

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