A the high-frequency trading debate continues, Virtu Financial (VIRT) sucessfully launched the first HFT firm IPO Wednesday with strong demand from investors.
The firm priced shares at $19 on Wednesday, the upper-end of its targeted range, and raised over $300 million at a $2.6 billion valuation.
This vote of confidence from investors comes just a year after Virtu pulled its IPO amid acute industry scrutiny, which followed the release of Michael Lewis' book "Flash Boys."
In a SEC filing last year, Virtu revealed it had only lost money on one day since 2009. “I thought it was a good thing to disclose to the world that the firm was profitable,” said Doug Cifu, Virtu CEO, at a conference last June. “But, boy, did that backfire in my face, so I take responsibility for that.” As of December 31, the 148-person firm generated net income of $190 million last year.
Yahoo Finance Senior Columnist Michael Santoli thinks perception of high-frequency trading has shifted over the past year.
“[Virtu is] an engineering firm. It's very high volume, very low margin and they basically are out there…keeping spreads tight on a lot of different trading instruments,” he says. “In fact, for that reason, a lot of people view them as not one of the predatory type firms.”
Virtu is the first high frequency trading firm to go public, but Santoli doesn’t think this will set a precedent for other HFT IPOs.
“A lot of the classic HFT firms are basically prop trading shops, they're not really market makers,” he says. “Again it's not as if there's a bonanza in this business. It really is just a processing business for the most part and I think that there's value in it.”