High-frequency trading, a business that has been shrouded in secrecy because its biggest firms were private, is coming out of the dark.
Virtu Financial Inc., the New York-based automated market maker that tried and failed to buy Knight Capital Group Inc. in 2012, filed for an initial public offering yesterday, disclosing that it had earned money every day but one in the last five years. The company is seeking a valuation of about $3 billion, about twice as much as rival KCG (KCG) Holdings Inc., which was created last year in the merger of Knight and Getco LLC, according to a person familiar with the matter.
Thanks to two decades of regulatory reform and technology advances, firms such as Virtu and Getco supplanted human traders as the main providers of prices on stock and commodity exchanges around the world. Business has been good enough that Vincent Viola and Douglas Cifu, Virtu's founder and chief executive officer, were able to buy the Florida Panthers professional hockey team last year.
"These are companies that show they are a solid, profitable, longstanding business and that there's investor demand to be a part of it," Kevin McPartland, head of market structure and research at Greenwich Associates in Stamford, Connecticut, said by phone.
"If we think back to 2008 and 2009, we never would have expected to see these companies go public, and doing so makes their financial statements available and open," he said.
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