April 21, 2017    1 minute read

High Frequency Mega-Deal

High Frequency Mega-Deal

Virtu Financial will by its high-frequency trading rival KCG Holdings for $1.4bn.

Editor’s Remarks: The acquisition will make the combined company one of the largest players in the US equity market. The change could come at a timely moment for both sides as the HFT world has been squeezed by shrinking profits due to the lowest levels of market volatility in around twenty years. At the same time, the cost of data and the latest technology has swollen. Virtu hopes the merger will go some way to solve this – it predicts cost savings of $208m (net of pre-tax expenses), for example – but the $1.65bn of debt it is taking on to finance the deal makes it a big gamble on the future.

What to watch: Virtu Financial, Citadel Securities, KCG Holdings

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