Goldman is REDI to move on
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10 February 2012David Easthope
Goldman Sachs announced that it is looking to spin off its REDI technologies division into a separate subsidiary and is looking to attract capital from other investment banks or other interested partners. REDI maintains the REDIplus Execution Management System (EMS). Goldman will still maintain a significant stake and apparently the spin off was not a particularly closely held secret and follows REDI's move to New Jersey. We believe this move makes sense for a few reasons: 1. GS does not want to continually invest valuable firm capital in a software business where differentiation is exceedingly difficult and getting more so day by day 2. Buy side clients are seeking best-in-class, broker agnostic tools for their execution needs (i.e. to control their own desktop) 3. REDI has a strong industry brand and can stand on its own, especially if other firms get behind it and provide growth capital 4. While it is not the easiest (or most desirable) thing for a broker to integrate their algorithms into a competing firms EMS, evolving into a separate subsidiary where Goldman maintains a strategic stake will help REDI attain the broker neutral image it has been trying hard to acquire for a number of years. 5. As Credit Suisse's AES division has shown, being a world class execution broker across multiple asset classes and geographies does not require a native EMS on the clients desktop. 6. Goldman Sachs has long been going in the broker neutral direction and even invested in UNX (Catalyst EMS) in 2011 Readers interested in EMS systems and trends should read my colleague Anshuman Jaswal's excellent report here: http://www.celent.com/reports/execution-management-systems-complexity-rise