Virtu Financial’s Takeover of KCG Holdings Is Imminent

A conformation of the deal is expected today with dire consequences for KCG's HFT traders.

A major chapter in the fascinating saga of high-frequency trading (HFT) firms is just about to end. The success of Virtu Financial’s unsolicited bid to buy all of the outstanding shares of KCG Holdings, Inc. (NYSE: KCG) will be announced today, according to the FT.

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Low volatility is considered to be the main force pushing for consolidation in the HFT sector. Once Virtu Financial’s takeover of KCG will be fully complete it is expected much of its current employees in the field will be let go. Furthermore, the FT reports that Charles Susi, head of institutional sales and electronic trading at KCG, has already announced internally that he was leaving the company.

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Background

KCG offers trading services across several asset classes, product types and time zones. For every order, the company provides a solution, whether market making or agency, lit or dark, voice or automated.

During February 2017, KCG reported an average daily US equities market making figure of $28.0 billion traded, which was virtually unchanged on a month-over-month basis from $28.1 billion in January 2017. This trend was on par with the majority of institutional and retail exchanges during the month, which was absent of any specific unified trend.

The Virtu Financial offer to acquire the shares of KCG’s common stock for $18.50-$20.00 per share in cash also is conditional upon its completion of due diligence, obtaining financing and other matters.

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