Cowen Group in talks to buy brokerage Convergex

Financial services company Cowen Group is in talks to buy Convergex, a brokerage, according to people briefed on the matter, as scale becomes increasingly important in the brokerage industry due to rising costs and low trading volumes.

No deal had been made and the discussions could still fall apart, the people said.

Officials for Convergex did not respond to calls seeking comment and neither did GTCR, the private equity company that owns the brokerage. A spokesman for Cowen declined to comment.

In January, Convergex agreed to merge LiquidPoint, its options trading and technology business, with Dash Financial, a trading technology, execution, and analytics provider.

Cowen is an asset manager, investment bank and broker dealer. It has continued to produce stock research on small companies geared towards active managers even as passive investing has soared and the rest of Wall Street has focused on larger companies.

Cowen also has been beefing up its trading capabilities and a deal with Convergex would give Cowen a larger platform.

The discussions between the two companies also come as trading volumes and volatility remain weak in spite of a brief uptick after the US presidential election. That atmosphere has been putting pressure on all groups that rely on trading. Volumes are falling as costs such as paying for cutting-edge technology and heightened regulatory burdens are rising.

Virtu Financial recently made an unsolicited bid for rival KCG Holdings in a deal that would unite two of the biggest players in high-frequency trading. The offer, which KCG’s board is reviewing, could value KCG at more than $1.3bn.

No financial details on a potential transaction between Cowen and Convergex were available.

The news was first reported by Bloomberg.