Anatomy of an IPO: Ari Rubenstein, GTS

NYSE designated market maker and high-frequency trading firm GTS recently managed the largest IPO of 2016. In an exclusive video and accompanying Q&A with GTS CEO Ari Rubenstein, we present a behind-the-scenes look at the preparation and execution by GTS as it helped take Line Corp. public with a market capitalization of approximately $10 billion.

New York Stock Exchange designated market maker (DMM) and high-frequency trading firm GTS recently managed the largest tech IPO of 2016. Line Corp (NYSE: LN) opened on July 16, with a market cap of approximately $10 billion. Here, in a TabbFORUM exclusive, we present a behind-the-scenes look at the preparation and execution by GTS as it helped take Line Corp. public.

TABB Group founder and CEO Larry Tabb sat down with Ari Rubenstein, the co-founder and CEO of GTS, to discuss the unique video, the IPO process, and the challenges newer and more electronic DMMs face in taking firms public.

Tabb: Ari, why make a video on this?

Rubenstein: We bought the DMM business in April from Barclays and before Line Corp., we had managed about a dozen companies going public this year. I’ve been in the trading business almost 25 years and I was struck by the abundance of pinpoint planning and precise execution that goes into an IPO. So I thought, if I wasn’t aware of all of this, maybe it would be really helpful to the broader marketplace to give more people behind-the-scenes access like they probably have never had before.

Tabb: Why did you choose Line Corp. for the video?

Rubenstein: We thought showing a high-profile, Japanese-based social media and technology company accessing the capital markets would be the most educational. It was a great display of how people around the world came together as one global capital markets ecosystem for the benefit of the company, shareholders and the greater financial community.

Tabb: We think of the NYSE IPO process as a manual book-building, supply-and-demand-aggregating process. How does an HFT firm like yours change/automate this process?

Rubenstein: We develop customized technology specifically for the DMM business. We have been fortunate at GTS over the years to be very nimble and innovative with our approach to technology and have a great team of full-time, in-house experts. Our technologists build pricing algorithms that take into account foreign exchange as well as securities traded in other markets. In the case of Line Corp., they dual listed on the Tokyo Stock Exchange (priced in Yen) the day after they listed on New York. That ends up yielding more efficient and accurate pricing for the companies that choose us to be their designated market maker – and for investors in general.

Tabb: Now that you are an NYSE DMM, how is the experience different than just being a more traditional HFT/electronic market maker?

Rubenstein: Certainly there are many similarities, but the NYSE DMM has a real capital commitment obligation. This is different from a typical exchange with an HFT market maker, which only has a quoting obligation. When the market is under stress, the GTS DMM has an obligation to step in with our own capital and stabilize things. HFT is proprietary trading, while becoming a DMM adds significant capital markets obligations. 

The other major difference is that my team and I are now directly engaged with a broader set of stakeholders in the public markets – most specifically, the issuer community. Listed companies from around the world are my clients, and we have a huge responsibility that they have entrusted to us. Nothing is more important to GTS than providing them with superior service.

Tabb: Ari, you started on the floor years ago in the New York commodities pits and now you’re trading more than a quarter-billion shares a day and helping take companies public from all over the world. Is it a full-circle moment for you?

Rubenstein: Certainty the numbers have scaled, but the fundamental mission of efficient price discovery hasn’t changed. And now the key differentiator is having technology deployed responsibly and in a scalable and reliable fashion. In an IPO, the stakes are very high for a lot of stakeholders, and I think the video will show the incredible commitment to excellence that goes into the IPO process.

For more on GTS, see the related Bloomberg Markets article, "What Do Berkshire, Twitter and Alibaba Have in Common?"

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