Formula One Trading: Ranking of 25 Leading Proprietary Trading Firms and Key Affiliates
“You wanna know which ring is my favorite? The next one.”Tom Brady The detailed exhibit presented at the bottom of this Feed post is 1) featured in our just-published case study, "The Rise of Hudson River Trading," 2) an expanded version of an already somewhat outdated exhibit originally published in our "History of Jane Street" case study (below), and 3) only an excerpt of a much larger global map of entities that Alphacution has been developing to be [...]
Case Study: The Rise of Hudson River Trading (Executive Summary)
"In playing ball, and in life, a person occasionally gets the opportunity to do something great. When that time comes, only two things matter: being prepared to seize the moment and having the courage to take your best swing."Hank Aaron ** The executive summary for Alphacution case study, "The Rise of Hudson River Trading," is also available for free download (with registration) in our Reports Library ** Introduction As if on cue, and apropos of the times, a [...]
XTX Markets: Lessons in Strategy Geometry – Part II
“Nearly all men can stand adversity, but if you want to test a man's character, give him power.”Abraham Lincoln In Part I of our Lessons in Strategy Geometry concept, we performed a comparative analysis between the shapes of 13F position rankings for HRT Financial, LLC (an affiliate of Hudson River Trading, LLC; the subject of our next deep-dive case study which is in the oven and almost fully baked, I promise), Latour Trading, LLC, and TRC Investments, LLC [...]
Outlook 2021: The Drunk-on-Impunity Mania Arrives
"You cannot escape the responsibility of tomorrow by avoiding it today."Abraham Lincoln With protestors storming the U.S. Capital - some of which breaching the outer doors and freely strolling the U.S. Senate floor - as surreal and unprecedented backdrop, I sit down to organize a sketch of Alphacution's outlook for the year ahead, starting with a very wide lens: The U.S. economy - much like the rest of the other "developed world" economies - is naturally weaker than [...]
Alphacution’s Top Stories for 2020
"You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something - your gut, destiny, life, karma, whatever." Steve Jobs I was going to start out by saying that it's been a pivotal year for Alphacution. Problem is, I said the same things at this time last year. So, I supposed that means it's been a [...]
Cutler Group’s Book: Hiding in Plain Sight
“For last year’s words belong to last year’s language, and next year’s words await another voice.”T. S. Eliot As we were riffing along with our recent Feed post on HAP Trading, I would've sworn than I had already shared a few words on another unique player from the option market making corner of the world, San Francisco-based Cutler Group, LP. Turns out, I had not... With the upcoming publication of a deep-dive case study on Hudson River Trading [...]
Alphacution Joins Lex Sokolin’s “FinTech Blueprint” Podcast
From Lex Sokolin: "Check out the fantastic podcast conversation from last week here: Understanding Robinhood, Derivatives, and Market Makers with Paul Rowady of Alphacution. In this conversation, we talk with Paul Rowady, who is the Director of Research for Alphacution Research Conservatory. Paul has a deep background in capital markets, derivatives, and the macro structure of the industry. He has been uncovering the transformation of that structure with data driven analyses, making visible the economics of market makers like [...]
According to D. E. Shaw, RenTech and Other Legends: Hindsight is Not 2020
"Quality means doing it right when no one is looking."Henry Ford I couldn't find the exact reference, but sometime between about 2010 and 2015 I wrote (for TABB Group) that when the market regime eventually shifted from the core drivers of the long, low volatility period of the post-GFC era, many quant models would become disoriented and their performance would suffer. This is simply because the behavioral cues of the new chapter would not be embedded in the [...]
Billions of Orders, Trillions of Shares: Comparing NYSE Arca and IEX
"The big question is whether you are going to be able to say a hearty yes to your adventure."Joseph Campbell The intensifying war between that which happens in the dark and that which happens in the light has finally moved equities exchanges fully within Alphacution's cross hairs. Given our belief that leading market makers and other sophisticated, technology-wielding trading firms are disrupting every stakeholder group in the ecosystem, it should come as no surprise to most of our [...]
Alphacution Press: Financial Times on Robinhood’s Brokerage Practices
Alphacution quoted in Financial Times story by Madison Darbyshire in London and Eric Platt and David Carnevali in New York on Robinhood's controversial brokerage practices, "Robinhood faces questions over business model after US censures" (December 19, 2020).
