@VirtuFinancial Pulls the Trigger on @KCG: Here’s Why…

@VirtuFinancial bid for KCG Holdings (@KCGHQ) today. Here’s why:

In the chart below, average daily adjusted net trading revenue for Q4-2016 returns to levels not seen since late 2013 / early 2014. Chances are quite high that persistent low volatility during Q1-2017 – which has only a dozen trading days left in it – has caused these figure to fall back to pre-2013 levels.

A situation like that needs a good distraction; something that can change the narrative and allow for lots of financial restructuring and restatements.  Voila! Try to take out one of your nearest competitors…

Problem is, it won’t work – even if the deal gets done. The cultures of Virtu and GETCO – the parts that are likely to fit together the most logically – won’t mesh. Knowing the founders and leadership, they are as different as New York and Chicago, as different as right and left.

Stay tuned…

 

By | 2018-02-28T16:33:28+00:00 March 15th, 2017|Alphacution Feed|

About the Author:

Paul Rowady is the Director of Research for Alphacution Research Conservatory, the first digitally-oriented research and strategic advisory platform uniquely focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. He is a 30-year veteran of the proprietary, quantitative and derivatives trading arenas with specific expertise in strategy research, risk management, and techno-operational development. Contact: feedback@alphacution.com; Follow: @alphacution.