My finance view

When Lehman Brothers collapsed last September, Japan’s Mizuho Securities elbowed past bigger rival Nomura Holdings to scoop up one of Lehman’s prized assets in Tokyo: its hotshot team of electronic traders.

A year later, that team of whiz-kid traders, cloistered from the rest of the trading floor by a wall of glass, has produced scant revenue, according to three people with direct knowledge of the matter.

Meanwhile, Mizuho’s dream of becoming an Asian equities powerhouse gathers dust, held back by caution and a slow-moving corporate culture.

“The firm has hired all the right people to do this and made a small investment in product development, but has yet to commit the budget to let this project go live,” said one source.

“There’s been no business. This crack team is still sitting there and in the meantime Nomura has been creeping up,” the source added.

The Mizuho team is made up of around 20 people and led by Anthony Brooker, former head of Asian electronic trading sales at Lehman. Members are broadly split between electronic trading and prime brokerage services.

Electronic trading is the routing of stock orders across a network, usually on behalf of hedge funds and other institutional investors. The Lehman team placed orders across Asia. Prime broking refers to a suite of services offered by securities firms and banks, usually to hedge funds.

A key Lehman offering was high-frequency trading on the Tokyo Stock Exchange, where it placed thousands of orders per second on behalf of clients, using algorithms and automated trading strategies.

In its heyday, Lehman was responsible for about 7 percent of the volume on the Tokyo exchange TSE.UL, with much of that driven by the team’s high-volume trades.

Mizuho, the securities arm of Japan’s second-largest bank, Mizuho Financial Group, has so far balked at pursuing the prime brokerage business, the sources said.

The sources spoke on condition of anonymity as they are not authorized to speak publicly.

STRICT ON RULES

Much of the delay is due to a cautious corporate culture that emphasizes planning and documentation, the sources said.

“Compared with Lehman or Morgan Stanley or other foreign banks, Mizuho is much stricter on the rules. But if you are too strict, you lose customers,” one said.

“(The team) wants to get this started quickly. They want to be doing electronic trading and prime services, but Mizuho wants to get its rules in place first.” 

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