Virtu Financial LLC

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Virtu Financial LLC
Virtu Financial Logo.gif
Founded 2008
Headquarters New York
Key People Vincent Viola, Executive Chairman; Douglas Cifu, CEO
Products Proprietary trading and market making
LinkedIn Profile
Website www.virtu.com

Virtu Financial LLC is an electronic trading firm and market maker in equities, fixed income, currencies and commodities. Virtu and its affiliates are members of the NYSE Euronext, NASDAQ, the Chicago Mercantile Exchange (CME) and more than 25 other exchanges and market centers around the world.

Virtu was founded in 2008 by former NYMEX chairman Vincent Viola, and quickly became one of the top high-frequency trading companies. In May 2011, the firm merged with electronic trading firm Madison Tyler, with an investment by private equity firm Silver Lake Management LLC.[1][2]

About 27 percent of its trading income in 2013 came from U.S. equities, with 23 percent coming from global commodities and 20 percent from global currencies. The rest came from equities in Asia and Europe, as well as trading in options, fixed income and other securities.[3]

Virtu completed an initial public offering on April 16, 2015. The company, which listed under the ticker symbol 'VIRT', saw its shares jump nearly 20 percent after the IPO, from an initial price of $19 a share to more than $22 a share.[4] [5] The company raised more than $300 million.[6]

History

In late 2011, Virtu was ranked as one of the five largest high frequency traders of equities in Europe.[7]

In late 2012, Virtu Financial LLC and Getco LLC both made takeover offers to Knight Capital Group Inc. (KCG) after a glitch in one of Knight's trading algorithms cost the firm $440 million loss.[8][9] In December 2012, Knight went with the Getco offer of $1.4 billion, or $3.75 a share.[10]

On March 10, 2014, Virtu filed for an initial public offering (IPO) to raise up to $100 million.[11] In the filing, Virtu said it had earned $182.2 million in net income in 2013 on revenue of $664.5 million, representing a 108% increase in profits from the year before, and that it had earned money every day but one in the last five years.[12] It also disclosed in the filing that the U.S. Commodity Futures Trading Commission is investigating Virtu’s “participation in certain incentive programs offered by exchanges or venues” from July 2011 to November 2013.

The owners of Virtu Financial, including Vincent Viola and Silver Lake, said they would not sell their shares. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Sandler O’Neill & Partners LP were the managers of the sale.[13]

Virtu's IPO filing marked it as the first ever initial public offering by a global high-frequency trading firm that trades only with its own money.[14]

In April 2014, Virtu said it would delay its IPO indefinitely. The delay came as a media frenzy developed over the publication of Michael Lewis' latest book, "Flash Boys," which accused high-speed traders and exchanges of "rigging" the U.S. stock markets.[15] In late April, Virtu received a letter of inquiry from New York Attorney General Eric Schneiderman, who is investigating whether high-speed traders are breaking any laws by acting on nonpublic information.[16] The FBI is also involved in the investigations.[17]

The company revived its plans in February 2015, as the media furor over "Flash Boys" appeared to have died down, and in April submitted a new filing. [18] The IPO was completed on April 16.

In April of 2017 Virtu agreed to acquire its rival KCG Holdings Inc. for $1.4 billion, tying up two big market makers. Virtu paid $20 per share in cash for KCG and funded the transaction by selling $1.65 billion in debt and $750 million of stock. The deal closed in July of 2017. [19] [20] [21]

The acquisition of KCG gave Virtu control of 20 per cent of all US stock trading.[22]

Key People

References

  1. Silver Lake Backs Virtu/Madison Tyler Merger. Mergers & Acquisitions.
  2. Virtu Announces Merger with Madison Tyler and Strategic Growth Investment from Silver Lake. Virtu.
  3. High-Speed Firm Virtu Revives IPO Plans. The Wall Street Journal.
  4. High-speed trader Virtu seeks $361m in US IPO. The Financial Times.
  5. Speed Trader Virtu Readies Another IPO Try. The Wall Street Journal.
  6. Virtu IPO Tests Perceptions of High-Speed Trading. The Wall Street Journal.
  7. Europe’s top 10 high-frequency kingmakers (in Scandinavia, at least). Financial News.
  8. Knight Capital shares sink after algorithm glitch. MarketWatch.
  9. Knight Board Said Meeting Next Week to Study Getco, Virtu Offers. Bloomberg.
  10. Getco to buy Knight Capital in $1.4 billion deal. Reuters.
  11. Trading firm Virtu Financial plans to raise up to $100 million in IPO. Reuters.
  12. High-Speed Trading Firm Tries Charm Offensive. The Wall Street Journal.
  13. Virtu Filing Shines Light on High-Frequency Trading. Bloomberg.
  14. Virtu admits weakness on expense accounting. Financial Times.
  15. Virtu Said to Delay IPO Amid Furor Spurred by Michael Lewis Book. Bloomberg.
  16. NY attorney general seeks info from high-speed firm Virtu: source. Reuters.
  17. Virtu Financial delays IPO amid Flash Boys furore. The Financial Times.
  18. Virtu seeks valuation of $2.59 billion. MarketWatch.
  19. KCG Acquisition by Virtu Completes. The Trade News.
  20. Virtu Agrees to Buy Speed-Trading Rival KCG for $1.4 Billion. Bloomberg.
  21. Virtu Financial Makes Bid To Acquire KCG Holdings. WSJ.
  22. Virtu's Viola seals biggest deal with military precision. The Financial Times.