Shares in the Investment Technology Group (ITG) surged by over 20 percent on Thursday after reports suggested Virtu, a high-frequency trading (HFT) firm, has plans to acquire it. At the close of trading on Thursday, ITG shares were trading at $27.64 – their highest levels since April 2015.
Based in New York, ITG is a multinational agency brokerage and financial markets technology company. Alongside a number of trading products, including equities, derivatives, and options, it operates its own private trading platform or ‘dark pool.’
According to a Bloomberg report, Virtu has sought the help of a financial adviser in order to acquire ITG. As the information surrounding the deal has not yet been made public, the adviser asked not to be named.
The same report suggests that Virtu’s interest in acquiring ITG remains – at least for now – just that, an interest. Though the two companies have been in talks about a possible deal, no final decision has been made, and ITG could still pull the plug on any acquisition plans.
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Such a deal is by no means coming ‘ex nihilo.’ Virtu has been shifting its business model from being a market maker that places bids and offers on exchanges to having a greater customer-facing role.
Last year, Virtu acquired KCG Holdings, at $20 a share, for $1.3 billion. Another HFT firm, KCG Holdings also provided execution services for retail brokers.
“Virtu and KCG both have a heritage of using technology to make markets more efficient,” said Douglas Cifu, Virtu’s CEO. At the time of the deal, “the combination of talented, dedicated professionals from KCG and Virtu will allow us to achieve more together than either firm could achieve alone.”
Whether Cifu and his backers feel the same way about ITG remains to be seen.