Virtu

[Clubber Lang]

View attachment 165999

Virtu cannot lose?
LTCM was going to change the world too. They did it indeed, but not the way it was supposed to go.

Since the high of the year the stock lost 35% of it's value and is making now new lows. Why if Virtu is a sure cash cow? Why did the initial investors go public? If you have a real cash cow you go public when growth is slowing down and most of the potential value is already taken.

Virtu cannot lose unless there is human error. They have a speed advantage over everyone else in the world. It is literally free money.
The reasons Virtu went public were to cash out as their free money gravy train was printing less money every month due to less people playing the rigged game, and because at some point (after the next crash) regulators will be forced to stop/regulate the charade known as HFT.

Front-running in microseconds is no different than frontrunning a brokers order over the phone.
Nobody cares because the markets have gone straight up for 7 1/2 years. But as any active trader knows, when the real selling starts, HFT "liquidity providers" are nowhere to be found.

 

[spread'em]

A few additional pointers:

The emergence of IEX and talk of other exchanges introducing speed-bumps will probably kill of Virtu's edge. They may as well cash in now.

Virtu have 'not lost' whilst we have been in a bull market spurred on by QE. It may be a very different story if CB intervention was pulled and we had them trying to front-run in a bear market. They would probably just exaggerate the selling on a massive scale (see flash crash).

To say they 'only lose to human error' is not an excuse. Computers rely on human input to begin with, they are just a tool to execute a human's wishes at faster speeds.

 

[Occam]

A few additional pointers:

The emergence of IEX and talk of other exchanges introducing speed-bumps will probably kill of Virtu's edge. They may as well cash in now.

How do you arrive at this conclusion? Virtu are heavy users and vocal supporters of IEX.
https://www.sec.gov/comments/10-222/10222-12.pdf

I don't think it would be accurate to lump Virtu and all the other HFT's together. FWIW I have read that Virtu is not among the quickest firms in the world, and their purported use of IEX would seem to support this.

To say they 'only lose to human error' is not an excuse. Computers rely on human input to begin with, they are just a tool to execute a human's wishes at faster speeds.

I agree; Virtu is not loss-proof, even with their stellar track record. Markets are (generally) getting more efficient over time. Virtu's edges could disappear in an instant, as has happened to many other electronic trading firms in the past 5 years.

 

[spread'em]

How do you arrive at this conclusion? Virtu are heavy users and vocal supporters of IEX.
https://www.sec.gov/comments/10-222/10222-12.pdf

I don't think it would be accurate to lump Virtu and all the other HFT's together. FWIW I have read that Virtu is not among the quickest firms in the world, and their purported use of IEX would seem to support this.

Fair point, this may not be their edge. I just thought they were heavily reliant on speed and this could be correlated.