Virtu Financial, the high-frequency trading firm that pulled its much-anticipated initial public offering last year has reengaged with its underwriters to issue shares sometime before summer, according to people with direct knowledge of the matter.
The company pulled the IPO amid controversy surrounding Michael Lewis's March 2014 book 'Flash Boys,' a highly critical and controversial book that contended high-frequency trading rigged the financial markets. He alleged the practice drove up trading costs for small investors by giving firms like Virtu and unfair advantage.
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The book sparked numerous regulatory probes and an FBI investigation. But it was also criticized as naïve and one-sided, and to date, those investigations haven't resulted in charges against a major firm engaging in the practice.
New York State Attorney General Eric Schneiderman has filed civil charges against the bank Barclays for allegedly giving high frequency firms an unfair advantage in trading through its so-called “dark pool” -- alternative trading platform that matches buyers and sellers of stock.
Virtu, founded by former New York Mercantile Exchange chairman Vincent Viola, pulled its IPO in April of 2014, citing the regulatory environment and market conditions. But now executives at the firm and their underwriters believe both are much more favorable for the firm to begin the formal process of issuing shares, these people say. Though the date of the IPO could change, these people say firm executives are planning to issues shares in the coming months, possibly by the Spring.
Douglas Cifu, Virtu’s chief executive officer, declined to comment.
In December, Temasek Holdings, the government of Singapore’s investment fund, took a slightly less than 10% stake in Virtu, signaling that the firm’s regulatory troubles were possibly easing. Silver Lake Partners, a private equity outfit, also owns a piece of Virtu and had been pressuring the company to go public so it could cash in on its investment.
Temasek told FOX Business it had no comment other than to confirm the transaction.
What’s still unknown is whether regulators such as the Securities and Exchange Commission will impose new rules that will make high frequency trading less profitable.
Temasek Holdings and Silver Lake Partners did not return requests for comment for this story.