IPO of Virtu Delayed
Virtu, which is a high-frequency trading firm, is delaying its IPO due to the recent wave of negative clout that the industry has been getting. The IPO would value the company at slightly over $3.5 billion. The recent negative attention was started by the release of Michael Lewis' newest book "Flash Boys" which has put pressure on these high-frequency trading, or more simply HFT, firms. In his book Michael Lewis calls the stock market in the US "rigged" by these HFT firms.
The company's CEO Vincent Viola noted that the HFT that Michael Lewis highlighted in his book was momentum and order-signal based trading. Mr. Viola also noted that Virtu only engages in exploiting the variability in the gap between bid and offer prices for stocks. By distinguishing between these two types of HFT, Mr. Viola hopes to distance his firm from the recent wave of negative news.
While the ethics of HFT can be debated, the profits of the strategy cannot. Virtu proved how lucrative its business was, losing money only one day in the past five years. One may argue that a company that's as profitable and controversial as Virtu should remain a private company. There is speculation that the main reason Virtu is going public is so that Silver Lake Partners, the private equity firm that provided an initial investment of $250 million to Virtu, could exit their investment. Regardless of what happens, Virtu will be an interesting company to watch go public.