The 10 biggest HFT firms in the world (BTW, HFT stands for high frequency trading for those not in the know) have heralded significant changes in the way traders around the world do business, by sheer technology.
Ever since financial markets were created, traders have always sought ways to beat the competition in landing the most profits possible. And in a long line of techniques, both legal and illegal, that have netted huge amounts of money for traders, high frequency trading is one of the latest. High frequency trading involves the use of a program trading platform with complex algorithms that analyze multiple markets. With the help of powerful computers, high frequency trading detects advantages in markets, executes large amounts of transactions, and conducts those with fast execution speeds, with the hopes that the speed will result in greater profits.
High frequency trading is a relatively new field of trading (with less than ten years in existence), but a controversial one, as other companies claim that there is something abusive about this practice that leaves ordinary investors at a disadvantage. In fact, high frequency trading companies have been subject to numerous criticisms and even investigations. However, as the rest of the market became aware of the use of technology for trading, the advantages of high frequency trading have diminished over time. In fact, this year, a lot of well-known figures in the high frequency trading field ended up resigning from their posts, citing thinning margins.
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For those who prefer to rely on more established investors, such as hedge funds, Insider Monkey has a list of the 10 largest hedge funds in the world and their favorite stock picks.
While most news coverage is focused on the perceived demise of high frequency trading, other notable websites such as Planet Compliance and eFinancial Careers have provided an in-depth look at high frequency trading companies, their financial statistics, and even how lucrative the salaries are in those companies. Though we note that some of those figures may change dramatically given the state of the HFT industry, we verified a lot of the financial statistics on those HFT companies, and they were more or less accurate, more so in the case of the two public companies included in this list.
As a vast majority of HFT firms are private, only nine companies have clearly disclosed financials. Among those HFT companies with undisclosed revenue, the one company we included in this list has the biggest ongoing HFT operation based on assets under management.
Nine of the 10 biggest HFT firms in the world, which are Citadel Securities, Flow Traders NV, GSA Capital Partners LLP, IMC Trading BV, Jump Trading, KCG Holdings Inc. (NYSE:KCG), Maven Securities, Optiver Holding BV, Tower Research Capital, and Virtu Financial Inc (NASDAQ:VIRT), are ranked on this list according to the yearly revenue pulled in during their most recently reported year. Check out the list beginning on the next page.
- Citadel Securities
One of the biggest high frequency trading companies in the world, Citadel Securities is a Chicago-based unit of Citadel LLC, a private investment company that has more than $25 billion in assets under management. Citadel Securities’ technology is noteworthy because it is able to provide quotes to traders in about 0.35 seconds, quicker than the 2-second mark of its nearest rival.
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- Maven Securities
High frequency trading company Maven Securities has offices in London and Hong Kong, but is registered in Malta. The company recorded sales of $116 million as of its fiscal year ended June 2016.
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- Jump Trading
One of the most prominent HFT names around, Jump Trading is headquartered in London. The company earned $119 million in revenue in 2015, the latest available earnings data for the firm.
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- IMC Trading BV
Doing business as IMC Financial Markets, IMC Trading BV is one of the three prominent HFT firms included on this list that are based in Amsterdam. IMC Trading, a unit of IMC BV, recorded $134.5 million in revenue in 2016.
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- Tower Research Capital
Another widely known name in the high frequency trading game, Tower Research Capital is a broker based in New York City. While Tower Research Capital did not disclose its financials per se, the company’s European subsidiary, known as Spire X, took in $179.5 million in revenues in 2015.
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The next five companies on this list of the 10 biggest HFT firms in the world each earned more than $300 million in their latest reported fiscal years, with two of them reaching the billion-dollar mark.
- GSA Capital Partners LLP
Aside from Amsterdam, London is another European city that is a hotbed for high frequency trading. For instance, one of the big names in the city, GSA Capital Partners LLP, recorded revenue of $355.8 million for its fiscal year ended March 2016.
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- Flow Traders NV
Flow Traders NV is another lucrative Amsterdam-based high frequency trading company, with $397.1 million in revenue in 2016. Proving once and for all that there’s more to the Netherlands than tulips and windmills.
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- Virtu Financial Inc (NASDAQ:VIRT)
One of the only two companies on this list that are trading on major U.S exchanges, Virtu Financial Inc. is a New York-based high frequency trading company that netted $611.8 million in revenue in 2016. While its 2016 revenue is only good enough for third place in this ranking, the company is poised to climb to the top of the HFT food chain, especially after it completes its deal to buy the top company on this list (more on that later).
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- Optiver Holding BV
The third (and most lucrative) Dutch high frequency trading company on this list, the Amsterdam-based Optiver Holding BV earned $1.31 billion in revenue in 2015. The company has not yet released its results for 2016.
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- KCG Holdings Inc. (NYSE:KCG)
One of the first names that comes to mind when it comes to high frequency trading, the New York-based KCG Holdings Inc. recorded $1.37 billion in revenue last year. However, the company is in the middle of a deal to be bought by Virtu Financial, in a merger that will result in an undisputable HFT behemoth. For now, KCG’s sheer earnings power puts it on top of this list of the 10 biggest HFT firms in the world.
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Disclosure: None
