structural alpha zone

Virtu’s Optionality? Some Good News…

“That which does not kill us makes us stronger.” - Friedrich Nietzsche “We adore chaos because we love to produce order.” ― M.C. Escher   One intangible cost of being the sole US publicly-traded market making firm is the required level of financial and operational transparency - and the investor relations burden - that comes with that status. In this case, that cost may be unusually high because of the relative opacity of the competitors in this sector - what Alphacution typically refers to as the structural alpha zone of its asset management ecosystem map - coupled with the unparalleled use of technology and extraordinary magnitude of wealth generated by that small group of players. To compound this dynamic, recent dramatic shifts in the landscape for retail order flow sparked by the late 2019 moves - en masse - to $zero commissions by retail-oriented brokerage platforms, and the quick follow-on consolidations of TD Ameritrade (by Charles Schwab) and E*Trade (by Morgan Stanley), and given the pandemic-fueled volatility and volumes of [...]

By | 2020-03-12T22:36:47-04:00 March 12th, 2020|Alphacution Feed|

Want Better Markets? Try a Herfindahl Kiss

"Enough is a feast." - Buddhist Proverb While many of us are ramping up to gorge ourselves on the annual tryptophan bacchanal, perhaps lubricated by an appetizer of American football where - in the likely case of far fewer of us - we will watch my hometown Detroit Lions perform their annual holiday impersonation of a major league sports franchise, and I will watch my 91-year old father behave as if they haven't been disappointing him for lo these past 53 years since the birth of Super Bowl I. Yes, it is the holiday season again and it probably borders on being little crass to talk shop on a coveted day away from whatever salt mine in which you have chosen to toil. But then again, I thought it might prove useful to offer a short bromide to accompany whatever you are feasting on today... Concentration risk, not of positions but of the increasing dominance of tech-wielding leaders on listed market inventory, is like a locomotive with no apparent mechanism [...]

By | 2020-03-02T16:55:39-05:00 November 28th, 2019|Alphacution Feed|