G1X

Stranded, As Virtu Bids Farewell to Madison Tyler

"We don't receive wisdom; we must discover it for ourselves after a journey that no one can take for us." - Marcel Proust With pandemic-era factors being historically and paradoxically hospitable for market volumes and volatility, those players that stand in closest proximity to the sources of listed liquidity have experienced an unexpected windfall so far in 2020. Today, with market making revenue for the past two consecutive quarters at all-time highs and seeming to bend a long-term downward trend in a new upward direction, VIRT stock found its own all-time high... For the remainder of this story, we need to refresh your perspective with a little context: Founded in 2008, Virtu is the youngest of a dozen leading proprietary trading and market making firms in the world: What is most unique about Virtu, however, in the context of this group is that it has grown primarily by acquiring other people's trading strategies - typically by outright acquisition of other companies - from the beginning. By comparison, all the others [...]

By | 2020-09-10T01:04:55-04:00 September 9th, 2020|Alphacution Feed|

ETF War Games

"Study the science of art. Study the art of science. Develop your senses - especially learn how to see. Realize that everything connects to everything else." - Leonardo da Vinci Market making in individual stocks has become so competitive that most hyperactive strategies - the ones that reside in Alphacution's structural alpha zone - have turned to increasingly rely on some form of ETF arbitrage. This competitive dynamic is exacerbated by factors such as liquidity fragmentation, liquidity internalization, payments for order flow (PFOF), and the winner-take-all impacts of process automation (aka - scaling via technology). For those proprietary trading firms with few, if any, options positions in their portfolio, cash ETF position concentrations (based on total 13F position counts) are represented as follows: When we isolate the leading order flow wholesalers and consider aggregate cash ETF positions as a percentage of 13F gross value, one of the clues that rises to the surface (in concert with the findings in the prior chart) is the prominence G1 Execution Services (G1X), a [...]

By | 2020-09-04T00:53:23-04:00 September 2nd, 2020|Alphacution Feed|