Financial advisor to Citigroup Inc.
Citigroup to acquire LAVA
July 5, 2004 - Citigroup has bought Lava Trading, a technology firm that helps fund managers to bypass brokers, for an undisclosed amount in an attempt to recapture business under threat from institutions that trade alone.
Lava is a specialist that taps all liquidity pools at once to find the best trade at the right time and price. It is responsible for the growth of direct trading by fund managers, who have realized that they no longer need brokers to find liquidity in the fragmented US market.
Its system is used by hedge funds, index funds and quantitative trading firms that use direct trading to cut costs, as well as by investment banks and market-makers seeking hidden opportunities. The deal is expected to close in the third quarter and will mean that Richard Korhammer, founder and chief executive of Lava, will report to James Forese, head of global equities at Citigroup. Lava will operate independently of Citigroup with strict firewalls to maintain confidentiality of client data.