Virtu Market-Making Slumps, Sees Net Loss of $55.5m in Q2

Virtu Financial, a market maker, has published its financial results for the second quarter of 2019 ended on the 30th of June. During the quarter, the company reported a net loss of $55.5 million.

According to the report, the net loss was primarily due to the costs associated with the $1 billion acquisition of Investment Technology Group (ITG), which, as Finance Magnates reported, was completed on the 1st of March this year, and which also hurt the company’s earnings in the first quarter.

During the second quarter, total revenues came in at $378.5 million. When measuring this against the same quarter of the previous year, which reported total revenues of $328.1 million, total revenues have increased by 15.3 percent.

Market-making revenues slump in Q2

In terms of revenues, Virtu generates the most revenues from its market-making operations. This primarily consists of market making in the cash, futures, and options markets across global equities, options, fixed income, currencies, and commodities.

For the three months ended on the 30th of June 2019, the total market-making revenues generated were $235.0 million. Against the second quarter of 2018, despite revenues increasing overall, market-making revenues have fallen by 18.3 percent.

For the quarter, Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term Services appear to be the saving grace for Virtu. The company’s execution services consist of agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions.

In the second quarter, the total revenues were $142.0 million for execution services. This is significantly higher than in the same period of the previous year when total revenues were $40.8 million, by 248.3 percent.

As a whole, net trading income for Virtu in the second quarter was $205.9 million. Comparing this with the second quarter of 2018, which had a net trading income of $258.6 million, Q2 of 2019’s figure has dropped by 20.4 percent.

Commenting on the results, Douglas A. Cifu, the Chief Executive Officer, said: "Against a challenging backdrop in the 2nd quarter, our business performed adequately. The market making segment was impacted to the greatest extent."

“However our execution services business, buoyed by the ITG acquisition, performed very well given the market conditions. While July market conditions were similar to the second quarter overall, we have seen a material increase in Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term in August and a commensurate increase in performance in all of our businesses.”