Patience is a Virtu(e)
Timing seems right as HFT firm takes another stab at IPO.
Though it's a phrase seldom used today, 'public virtue' was one of the great guiding precepts of late eighteenth-century Republicanism — often used by the founding fathers of the United States to argue against corruption of the monarchy and the undue influence of commerce on government, more generally. Those were slightly higher times in political debate, after all.
A similarly colorful, if not always sophisticated, discourse has sprung up over the last year on high-frequency trading (HFT). And now, it's set to roll with a public Virtu of its own — though of a very different kind.
This week, the multi-asset class HFT firm decided it had waited long enough after Flash Boys' furor to take another stab at listing on Nasdaq. Submitting an S-1 prospectus to the SEC on April 6, the firm is reportedly eyeing valuation somewhere in the neighborhood of $2.5 billion. That would make founder Vincent Viola something that, for all the hoopla, is still fairly rare in HFT: a billionaire.
Sensible Moment
Given what we already know about a Virtu IPO from the first time around, there aren't a lot of surprises in this latest iteration, beyond some revised financials. Now it's just about getting the thing done without another major hitch. As we all know by now, that's no sure thing.
We'd all probably be better off with more high-speed trading houses disclosing more about their business, even at the margins. Read into Flash Boys what you will — for me, that was the real takeaway.
As was pointed out last April when the first effort was aborted, stocks for public exchange operators and similar electronic market makers like KCG were suffering in early 2014 — and they have recovered to a decent extent since then. The ill-fated BATS Global Markets IPO, when the exchange's own systems failed on the same day it was meant to go public in 2012, was also a little fresher on minds back then, as well, than it is today.
All told, therefore, this moment seems like a sensible one from a commercial standpoint. Vinnie will finally cash in. But there's an argument or two for the industry, as well. Though companies going public doesn't always guarantee transparency into what they're up to — far from it — it usually provides more insight and disclosure than we had otherwise.
And that will surely be the case with the conspicuously tight-lipped Virtu.
For one thing, we'll definitely know better whether certain disputed claims about trading at speed are true — Virtu was harangued during the first IPO for arguing that it made money every single day for years, for example — and better industry analysis of HFT will hopefully follow.
For another, with HFT giants in KCG and Virtu now both trading publicly, we should get a better sense of how the market really feels about regulatory risk and the practice's prospects going forward — a fresh opinion without caveats in a debate that could probably use one. It's not exactly an 'HFT index', but it's a start.
Bookends
Most of all, though, Virtu's renewed IPO push is further proof that the era of Flash Boys may have finally crept to an end — and done so with relatively little substantial change, at least as of yet, beyond a few ongoing investigations.
Of course, as the IPO process moves along it should prove interesting to see how well Virtu actually does. One hopes it does well, because for the reasons above, we'd all probably be better off with more high-speed trading houses disclosing more about their business, even at the margins. Read into Flash Boys what you will — for me, that was the real takeaway.
For now, an HFT public offering, once derailed, again heads forward — and whichever side of the debate you're on, that seems just a little fitting.
Next, Viola just needs to get his hockey team, the Florida Panthers, back in the NHL playoffs. Sadly, that could take a while longer. Somehow or another, HFT belongs in the markets in 2015. Hockey in South Florida? Well, that's a different question.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Trading Tech
This Week: FCA, Plato/Turquoise, Franklin Templeton, and more
A summary of the latest financial technology news.
CME: CFTC OKs clearing move to Google Cloud
The CFTC has given the Chicago-based exchange approval to run its clearing and settlement infrastructure on the Google Cloud Platform, while the exchange and vendor have extended their partnership to last until at least 2037.
JP Morgan touts DLT, tokens for collateral management
Distributed-ledger technology could make moving non-cash collateral more efficient, said managing director Toks Oyebode during an Isda conference on Thursday.
Waters Wrap: The changing definition and perception of blockchain
Anthony says that questions of definition and perception are killing DLT projects in the capital markets—oh, and a lack of proven implementations.
BlackRock to integrate Aladdin and Preqin to create new private markets platform
CEO Larry Fink calls combining the two platforms “maybe the biggest opportunity in 10 years.”
Ace high or busted flush? Digital Asset’s mixed fortunes mirror DLT adversity
The vendor hoped to remodel post-trade using blockchain technology—and it still might—but its bumpy progress raises questions over the future of DLT in finance.
This Week: BlackRock/Preqin, Trading Technologies, FIA Tech and more
A summary of some of the past week’s financial technology news.
Adaptive’s Aeron goes live on Microsoft Azure Marketplace
The messaging software used for building bespoke trading platforms is now available on Microsoft’s marketplace, making it accessible through major cloud providers.