NinjaTrader Group, LLC purchased futures commission merchant TransAct Futures on the last tick of the clock on December 31, 2020, giving the owner of the fast growing technology and brokerage firm their own FCM to modernize their business. NinjaTrader’s goal with this deal and their growth plan is to become nothing short of the “number one destination for active futures traders.”
This deal represents a well worn path in the futures industry, following firms like TradeStation and Interactive Brokers, who transitioned from technology providers to brokers. NinjaTrader was founded in 2002-03 by Raymond Deux, a futures trader who wanted better tools to trade. His solution became a company when suddenly he had hundreds of fellow traders using his software.
After a period of 10 years of building better and better trading technology, which was connected to the markets through APIs provided by brokerage firms or other technology providers, NinjaTrader LLC changed course. In 2014, NinjaTrader took the step to become a broker by buying Introducing Broker Mirus Futures. Mirus was the brokerage arm of Big Tick, the firm that also owned 7Ticks, which provided connectivity and technology support to trading firms and was later bought by IDC.
NinjaTrader Brokerage has spent the last six years on a growth path that has seen the firm outgrow the Independent Introducing Broker model, Ninja Trader Group CEO Martin Franchi said in an interview.
TransAct Futures had started as a proprietary trading firm that pivoted to become a futures commission merchant, Franchi said. TransAct had previously bought Infinity Futures, a firm that was fined by the NFA in November. TransAct became a member of the NFA in 2001 and a registered FCM in 2002. It appears from NFA records that TransAct and Infinity hooked up in 2010.
The deal between NinjaTrader and TransAct will eventually see the Infinity Futures registration go away, but the Infinity sales team is to be integrated into the NinjaTrader Brokerage operation. Most of the principals of Infinity have retired or exited, Franchi said, including James Mooney, the founder of Infinity, who was recently named in the NFA action.
Currently NinJaTrader Brokerage clears through Dorman Trading and Phillips Capital. That will not change in the short term, as Franchi said they needed to ramp up all aspects of TransAct to be able to handle the NinjaTrader business. Franchi said he expects to hire 20 to 25 new people in the next year to scale the TransAct business.
NinjaTrader has about 180 employees, with a little more than 20 of them coming from TransAct and Infinity Futures in the deal. Franchi says he expects it will take “six months” before beginning to transition NinjaTrader clients to TransAct.
When they are done, TransAct will remain a standalone FCM. NinjaTrader Brokerage will be their chief client as an Independent Introducing Broker.
Franchi, who joined Mirus Futures from Kraft Foods before the NinjaTrader deal, took over as CEO of NinjaTrader Group in 2018. He wants the “modernization of everything” at TransAct as part of its growth strategy. When they are done, he says they will be able to “control the customer experience” better.
He also expects to see NinjaTrader continue to grow internationally. They currently have eight different regionalized languages spoken by NinjaTrader employees, including German, Russian, French, Italian, Portugese and Spanish. They have hired 20 foreign language speakers as part of this strategy.
The NinjaTrader software is not just for use by NinjaTrader Brokerage customers but may still be used by customers using different brokers. While the platform does allow equities trading, NinjaTrader Brokerage is “laser-focused” on futures trading and its goal is to be the “number one destination for the active futures trader.”
They are off to a pretty good start with that goal, as they have over 100,000 users of the NinjaTrader software on any given month and in the last 12 months they have seen a half a million users of their platform, Franchi said.
The deal was facilitated financially by fintech focused private equity investors, whom NInjaTrader Group had picked after some help from an investment banking firm. The NFA website shows GF GW LLC, Long Ridge Equity Partners II LP, Long Ridge NT Offshore Investor LLC and Long Ridge Parallel NT Holdings LLC as their institutional investors.