@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 techno-operational dynamics, and the business impacts of those decisions, in and for the global financial services (FSI) ecosystem. He is a 30-year veteran of the proprietary, quantitative / automated and derivatives trading arenas with specific expertise in strategy research / implementation, risk management, and technology development. Contact: feedback@alphacution.com; Follow: @alphacution.