Virtu Financial
| Company type | Public |
|---|---|
| Industry | Financial services, High-frequency trading |
| Founded | 2008 |
| Founder | Vincent Viola, Douglas Cifu |
| Headquarters | New York City , United States |
Area served | Worldwide |
Key people | Douglas Cifu (CEO), Vincent Viola (Founder) |
| Products | Electronic market making, High-frequency trading |
| Website | www |
Virtu Financial, Inc. is a U.S.-based firm specializing in high-frequency trading that became publicly traded on Nasdaq in 2015.
Organization
Virtu Financial is headquartered in New York City and was established in 2008 by Vincent Viola, who previously chaired the New York Mercantile Exchange and owns the Florida Panthers. Since 2013, Douglas Cifu has served as CEO and co-founded the company alongside Viola; he also co-owns the Panthers and acts as an alternate governor. Prior to joining Virtu, Cifu was a corporate law partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP.
The company champions rigorous electronic market making protocols, emphasizing continuous quoting close to the inside of the national best bid and offer across diverse securities. In 2011, Virtu ranked among Europe's top five high-frequency equity traders.
In 2014, Chris Concannon, who held the roles of president and COO at Virtu, was appointed president of BATS Global Markets, a trading platform founded by high-frequency traders.
Operating worldwide, Virtu maintains offices in New York (its main base), Austin, Los Angeles, Boston, Chicago, London, Sydney, Dublin, Hong Kong, and Singapore. The firm expanded its European headquarters to Dublin in 2013. Virtu Financial Ireland Limited is regulated by the Central Bank of Ireland.
Company history: mergers and acquisitions, partnerships, and other company moves
In May 2011, Virtu combined forces with Madison Tyler, a proprietary trading company located in Santa Monica, California, backed by Silver Lake Partners—a private equity firm focused on technology investments. Madison Tyler was co-founded by Vincent Viola and David Salomon, a former Goldman Sachs arbitrage trader.
Later that year in December 2011, Virtu purchased Cohen Capital Group's market-making division for NYSE Amex stocks. This acquisition made Virtu the largest overseer of trading on the American Stock Exchange prior to its 2008 acquisition by NYSE Euronext. The transaction granted Virtu a designated market-maker license for New York Stock Exchange-listed companies, broadening its portfolio to include names such as New Gold Inc., Northern Oil & Gas Inc., and American depositary receipts of British American Tobacco.
In September 2012, Virtu entered the European ETF market through acquiring ETF market maker assets from Nyenburgh Holding B.V., a high-frequency trading entity.
A significant expansion occurred in April 2017 when Virtu agreed to acquire competitor KCG Holdings for $1.4 billion in cash; this deal was finalized in July 2017.
In November 2018, Virtu announced plans to purchase Investment Technology Group (ITG), an agency brokerage and financial markets technology company, for $1 billion. The acquisition was completed in March 2019 to enhance its agency and broker-neutral capabilities.
November 2021 saw Virtu introduce an electronic swaptions workflow on its RFQ hub to broaden its product suite.
By May 2022, Virtu ITG Europe further expanded its global footprint by joining the SIX Swiss Exchange.
IPO
Virtu Financial initially intended to launch its IPO in early April 2014 but postponed it amid increased scrutiny surrounding high-frequency trading (HFT) practices. The company aimed for a valuation around $3 billion with the offering expected to establish founder Vincent Viola as the first billionaire from HFT. After additional delays, Virtu priced its IPO on April 15, 2015, with Nasdaq trading commencing the next day. On November 12, 2015, Virtu completed a secondary offering of Class A common stock involving Silver Lake Partners.
Trading activity
Virtu engages in trading across more than 235 venues, including exchanges, markets, and dark pools spanning 36 countries. Some of the prominent platforms it operates on are NYSE Euronext, NASDAQ, and the Chicago Mercantile Exchange. The company holds the role of a designated market maker on both NYSE and NYSE Amex, offering passive quotes for upwards of 12,000 different securities and financial products.
In August 2014, Virtu collaborated with GSA Capital to complete the inaugural trades on ParFX Prime, a foreign exchange platform aimed at creating a fairer trading environment by implementing random delays in order matching rather than following the traditional price-time priority system.
When Virtu filed for its initial public offering in 2014, it revealed a remarkable track record of profitability on 1,277 out of 1,278 trading days over a five-year span. Astrophysicist Gregory Laughlin examined this near-flawless profit history and concluded that although Virtu wins roughly 51-52% of its trades, many other trades break even instead of incurring losses, reflecting very limited exposure to market risk.
Investigations
In April 2014, New York Attorney General Eric Schneiderman sought detailed information from Virtu concerning its high-frequency trading activities. This inquiry focused on areas such as special arrangements with dark pools, specific trading methodologies, and the use of latency arbitrage. A few months later, in July 2014, the Securities and Exchange Commission (SEC) included Virtu among ten high-frequency trading firms holding broker-dealer licenses under investigation for potentially manipulative practices like layering and spoofing. This probe concluded with a settlement announced in 2017.
Heightened regulatory attention on high-frequency trading firms followed the release of Michael Lewis's bestselling book Flash Boys: A Wall Street Revolt in March 2014. More recently, in 2023, the SEC conducted an investigation into Virtu regarding inadequate safeguards for sensitive client trade data.
These regulatory reviews have shaped Virtu’s approach to business operations and transparency within the highly competitive domain of electronic market making and trading technology.