Wednesday, April 05, 2006

More on the Terra Nova / Rush Merger

Yesterday, I had the opportunity to talk with both Chris Doubek, Terra Nova’s president, and Rusty Moore, CEO of Rushtrade, about the upcoming merger. 

Chris Doubek, Terra Nova’s president, says, “At a high level, the plan is to merge the two firms and increase the level of service.‿ According to Doubek, the rationale for the merger is to combine RushTrade’s proprietary trading software with Terra Nova’s back-end processing and clearing operation to create an entity that owns its own technology “from soup to nuts.‿

Rush is smaller, but publicly traded.  They were looking for a way to go self-clearing while Terra Nova had been quietly on the market for several months.  Doubek says, “The way this worked out, we looked at the opportunities of merging the two entities that creates one firm that has our back-end and their front-end.”

Terra Nova has been self-clearing for two years, while RushTrade has cleared through Penson Financial Services.  Doubek says the combined firm plans to implement self-clearing for RushTrade’s customer base in the very near future. 

Terra Nova at present licenses Townsend Analytic’s RealTick software, which Doubek admits is “a little much‿ for the average retail investor.  Doubke says that RushTrade’s trading platform offers about 70% of RealTicks’ functionality, but will be much less expensive to offer.  They will continue to offer RealTick to their high-end customers, but will encourage their “average” retail traders to use the RushTrade platform, which will result in lower costs for those customers. 

Rusty Moore, Jr., Chairman and Chief Executive Officer of Rush is enthusiastic about Terra Nova’s back office proprietary solution, which he says, “gives us a low cost solution in the marketplace since we’re not licensing the technology from someone else like some other self-clearing firms are.‿

Doubek indicated that the combined firm plans to offer “very competitive‿ commissions, but will stay out of the low end currently occupied by Interactive Brokers and MB Trading. 

Posted by twcarey on 04/05 at 12:04 PM
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