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Virtu’s IPO: First high-frequency trading firm to go public

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  • Michael Lewis
    American writer

A the high-frequency trading debate continues, Virtu Financial (VIRT) sucessfully launched the first HFT firm IPO Wednesday with strong demand from investors.

The firm priced shares at $19 on Wednesday, the upper-end of its targeted range, and raised over $300 million at a $2.6 billion valuation.

This vote of confidence from investors comes just a year after Virtu pulled its IPO amid acute industry scrutiny, which followed the release of Michael Lewis' book "Flash Boys."

Rel: Michael Lewis: A year after 'Flash Boys,' market still broken but can fix itself

In a SEC filing last year, Virtu revealed it had only lost money on one day since 2009. “I thought it was a good thing to disclose to the world that the firm was profitable,” said Doug Cifu, Virtu CEO, at a conference last June. “But, boy, did that backfire in my face, so I take responsibility for that.As of December 31, the 148-person firm generated net income of $190 million last year.

Yahoo Finance Senior Columnist Michael Santoli thinks perception of high-frequency trading has shifted over the past year.

“[Virtu is] an engineering firm. It's very high volume, very low margin and they basically are out there…keeping spreads tight on a lot of different trading instruments,” he says. “In fact, for that reason, a lot of people view them as not one of the predatory type firms.”

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Virtu is the first high frequency trading firm to go public, but Santoli doesn’t think this will set a precedent for other HFT IPOs.

“A lot of the classic HFT firms are basically prop trading shops, they're not really market makers,” he says. “Again it's not as if there's a bonanza in this business. It really is just a processing business for the most part and I think that there's value in it.”

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