Tech Firm May Trade Hands

Citigroup Inc., a global business behemoth, is in talks to spend about $700 million to buy Automated Trading Desk, a Mount Pleasant-grown tech firm that now handles 6 percent of New York stock market trades.

ATD and Citigroup declined to answer questions about the deal Wednesday, though a local source close to the Mount Pleasant company confirmed that the two firms are finalizing what would be one of the area's largest business deals to date.

"This is a company that's been on a lot of people's radars for a long time," said Brad Bailey, a senior analyst at Aite Group, a Boston-based consultancy. "It's very much in the right place at the right time."

Using ultrafast computers and complex equations to predict and capitalize on small changes in stock prices, ATD has staked a large claim on Wall Street from more than 750 miles away. When an investor sells shares of stock through a Web site such as E*Trade or Ameritrade, there is about a 1 in 10 chance that the online broker will route the order to ATD's banks of computers off Johnnie Dodds Boulevard. Most of the firm's 115 workers build computer systems and keep them finely tuned, though about 15 ATD employees actively trade.

Steve Swanson, co-founder and current chief executive of the company, is a graduate of Wando High School and the College of Charleston. ATD's version of cyber-arbitrage usually pays off in pennies or, more often, tiny slivers of pennies. However, those minuscule amounts add up quickly for ATD, which executes 10 trades a second and filters about 200 million shares a day, or roughly 6 percent of volume on both the Nasdaq and New York stock exchanges

That volume of business has caught the eye of some of the country's blue-chip banks and tech investors. In January, Technology Crossover Ventures, one of Silicon Valley's biggest venture-capital firms, bought a $60 million stake in ATD. Though ATD no longer discloses how much money it makes, in 2000, when the firm had about 30 workers, it reportedly made $62 million in profit. When the tech bubble popped in 2001, ATD still earned $49 million, though that result was a 21 percent drop.

The firm has remained a market leader by building increasingly fast and increasingly expensive computers. It also has ponied up a lot of cash to hire renowned tech engineers from all over the world. "In a way, they stand in a class by themselves," Bailey said. "There are other smaller firms, very specialized, but they are in many ways the children and the offshoots of ATD."

Ernest Andrade, head of the city of Charleston's Digital Corridor economic development initiative, said the buyout would be a milestone for the local tech industry. "It would be by far the largest transactions that I'm aware of," Andrade said. "To me, this is the ultimate validation that Charleston's knowledge economy is alive and well. ... And it creates a substantial numbers of new millionaires, many of whom will take a substantial amount of their new wealth and invest it in this economy."

A $700 million deal for ATD would dwarf the biggest recent deals in Charleston. In comparison, Blackbaud Inc., one of the biggest employers in the area, raised about $65 million when it went public in 2004.