revenue per employee

Virtu’s Q3 Net Trading Income Was Predictable Before Earnings Release

Alphacution presents an excerpt from its analysis of the relationship between Rule 605 data and net trading income from retail order flow - along with a selection of updated charts for Virtu Financial for Q3 2023... The full Feed post is available to Silver and Premium subscribers...

By |2023-11-12T23:18:13-05:00November 10th, 2023|For Subscribers|

Virtu’s Q3 Net Trading Income Was Predictable Before Earnings Release

For wholesale market makers in US equities there appears to be a relationship between Rule 605 data and net trading income from retail order flow. For Virtu Financial, a public company and the closest example to a "pure play" in US equity wholesaling, this relationship could have been estimated before the Q3 2023 earnings release date. In this Feed post, Alphacution shares its analysis for this finding - and why it's not the most important component of this discovery...

By |2023-11-12T23:23:49-05:00November 10th, 2023|Silver / Premium|

The Evolving Value of Edge (Silver and Premium Subscribers)

What is the value of trading edge? Using "revenue per employee" as a comparative indicator, Alphacution dives deeper than ever before into Virtu Financial's market making business. The results cause a dramatic re-ranking of Virtu in a list of 10 market makers - plus a few other fascinating findings...

By |2023-11-12T23:16:47-05:00November 2nd, 2023|Silver / Premium|

Man or Machine: Who Are The Real Trading Champions?

Despite dramatic changes to the fortunes of quantitative trading strategies of late, they still represent the extremes of "technology leverage" in the global markets ecosystem. This means that due to a high level of workflow automation, these types of firms generate more output - as measured by revenue per employee (RPE) - than any others in the industry. Or, so we thought... In the context of its broader research mission, Alphacution has been focused - perhaps even a little obsessed - on modeling, measuring and benchmarking the interplay between the two primary engines of productivity within the global financial services ecosystem: technology capital and human capital. The value of this research - something we call "navigational intelligence" - is to help technology buyers understand where they fit amongst the constellation of peers and competitors, and for solution sellers to understand the needs and spending patterns of their clients. Until recently, high frequency trading and market-making operations - like those found at Virtu Financial and its newly acquired KCG Holdings - [...]

By |2020-10-14T21:52:16-04:00September 20th, 2017|For Subscribers|

The Source of #AI Hype

Apple doesn't mention it... Amazon doesn't mention it... Alphabet (aka - Google) does mention it - but doesn't link it specifically to financial performance... IBM? You betcha. More than 155 times... In case you have been living under a rock - which, now that I think of it, has some increasing allure - artificial intelligence (and its slightly less sexy twin, machine learning) has succeeded 2016's marketing darling, blockchain, to become the blinking-neon-sign-outside-your-hotel-room term for 2017. Sorry, folks. The budgets have already been allocated. Go find predictive analytics (2014) and digital transformation (2015) in the dust bin of over-exposed marketing terms if you are not yet hip to how this game is played. Now, let's take a quick step back for a second: This is NOT an anti-AI hit piece. Nor is this an IBM-gotcha piece. I am a fan of both. But, this is simply a commentary based on the convergence of connect-the-dots exercises that have come out of our modeling and research. Yes, AI has an incredibly promising - if not, slightly scary [...]

By |2020-10-05T21:15:45-04:00April 27th, 2017|Open|

@VirtuFinancial: Valor #HFT Morghulis

If you read Part 1 to this post (from December 15, 2016) then you know that at least as of the end of 2015, financial reports from HFT bellwether Virtu Financial illustrated strong and even increasing profitability. Our surprise from these impressive figures came from the countervailing hypothesis that HFT was already well past its prime (given the evidence of prop shop closings and consolidations over the past 5 years or so). Apparently, Virtu didn’t get that memo. However, upon closer inspection of the most recent quarterly reports – which as of now yields details over 11 quarters starting in calendar Q1 2014 (March) and ending in calendar Q3 2016 (September) – even this bellwether may have seen its best days. Exhibit 1 (below) is one perspective of what this recent turn of fortune looks like: Some translation: After spiking in Q4-2014 and peaking in Q1-2015 at an annualized (adjusted net trading) revenue per employee (RPE) of over $4.1 million, trading revenue as of the end of Q3-2016 has returned to somewhat less [...]

By |2020-08-17T07:14:09-04:00January 12th, 2017|For Subscribers|

@VirtuFinancial: Let the good #HFT times roll!

It's March 25, 2016 - and I crack open the newly minted 10-K from our friends at Virtu Financial. The equivalent of that new car smell wafts northward from its fresh digital pages. The anticipation is palpable. With years of intense focus and vigorous debate on the mechanics of #HFT - and the jealous wonderment surrounding its stratospheric profitability - it is both rare and puzzling that the public should get a real, data-driven look inside to support or debunk the mythology of this ultra-secretive corner of the global financial landscape. Searching within this fresh set of data, I update our model - and the output creates one of those WTF cognitive dissonance moments. After all, isn't the heyday of HFT over?! Haven't numerous high-speed shops consolidated or folded? As a refresher, the vid below is what we were saying back in July 2013 (while at Tabb Group): Hello from 2013! Struggling is not what's going on here. By the looks of things at Virtu - at least as of the [...]

By |2020-08-17T07:14:10-04:00December 15th, 2016|For Subscribers|