Virtu Financial Jumps in Public Trading Debut

Features Reuters

Shares of electronic trading firm Virtu Financial Inc (VIRT) rose as much as 24.6 percent in their debut, which was postponed by nearly a year due to widespread criticism of high-frequency traders.

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The company's shares touched a high of $23.67 on the Nasdaq on Thursday, valuing the market maker in equities, fixed income, currencies and commodities at about $3.23 billion.

Virtu postponed its IPO last year, following the release of Michael Lewis's "Flash Boys: A Wall Street Revolt," a book that questioned whether markets were rigged in favor of high-frequency traders.

U.S. regulators also sought information on registered broker dealers, including Virtu, as part of an investigation into high-frequency trading strategies.

Virtu was criticized after it said it had incurred only one day of trading losses in five years, seemingly giving credence to Lewis' claims that the fast traders were making billions at the expense of the little guy.

The company, like other high frequency traders, earns money through "spreads" - the difference between what buyers and sellers are willing to pay or accept in a trade.

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"If you analyze the March quarter, it has got a very low price-to-earnings ratio," said Francis Gaskins, president of ipopremium.com. He expects the stock to "edge up."

Its competitors include large broker-dealers such as Bank of America Merrill Lynch and Citigroup Inc, as well as niche players such as Citadel, KCG Holdings, Timber Hill and Wolverine Trading.

Founder Vincent Viola, a former chairman of the New York Mercantile Exchange, will control Virtu though his ownership of Class D shares, which have more voting rights.

The IPO of 16.5 million Class A shares was priced at the top end of the expected $17-$19 per share range, raising about $314.1 million.

Virtu said in its IPO filing it expected to pay its first dividend of 24 cents per Class A share in the third quarter. (http://bit.ly/1OHEbgU)

The company's revenue rose 8.8 percent to $723 million in 2014, while net income rose 4.3 percent to $190 million.

Goldman Sachs Group Inc, JPMorgan Chase & Co and Sandler O'Neill + Partners LP were among the underwriters for the offering.

(Reporting By Sudarshan Varadhan; Editing by Joyjeet Das and Saumyadeb Chakrabarty)