Patience is a Virtu(e)

Timing seems right as HFT firm takes another stab at IPO.

Patience is a virtue, Virtu believes.

Virtu Financial, Vincent Viola's bellweather high-frequency trading shop, disclosed this week that it would take another shot at public offering. Tim tries to read between the S-1's many lines.

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.


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.



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