US electronic market maker, Virtu Financial Inc., today reported better-than-expected third-quarter earnings, having made $199.7 million in Q3 net income compared to a net loss of $5.2 million in the prior year quarter.
New York-based Virtu’s upbeat performance was fueled by a surge in trading by retail investors during the coronavirus pandemic. Specifically, net trading income nearly doubled to $441.3 million in Q3 of 2020, compared to $220.1 million for the same period in 2019.
Basic and diluted earnings per share for Q3 was $0.92, compared to a loss of $0.04 per share in Q3 of 2019, which included costs related to the company’s $1 billion acquisition of brokerage ITG Inc. Excluding one-off items, Virtu profit increased to $160.9 million for this quarter, compared to $39.6 million for the same period a year earlier.
“Client partnership, providing Liquidity to the global capital markets and implementing our strategic initiatives will help Virtu deliver our strongest year on record. Our third quarter results confirm the resilience and scalability of Virtu’s business model; , we are poised to meaningfully enhance shareholder returns, beginning with up to a $100 million buyback of shares, which our Board of Directors has approved,” said Virtu CEO, Doug Cifu.
Other business highlights show that total revenues increased 72 percent to $656.1 million relative to $382.3 million in Q3 of 2019. The company attributed the gain to the sale of MATCHNow, also citing higher volatility, bid-ask spreads and trading volumes due to the COVID-19 pandemic.
In August, Virtu Financial completed the sale of Canada’s largest ‘dark pool’ stock Trading Platform , MatchNow, to Cboe Global Markets for an undisclosed price.
The deal was initially signed back in May, nearly 14 months after Virtu Financial Inc. acquired MatchNow. This was part of its $1-billion buyout of electronic brokerage Investment Technology Group in March 2019.
Virtu Americas LLC (formerly KCG Americas LLC) is also operating another alternative trading system, called Virtu MatchIt. Earlier last year, it agreed to pay the Securities and Exchange Commission $1.5 million to settle allegations that its dark pool exceeded trading volume thresholds on certain securities.
Virtu makes markets with over 25,000 financial instruments, at more than 235 venues, in 36 countries worldwide, continuously quoting buy and sell prices for others to trade against, profiting off the bid-offer spread and using high-frequency trading (HFT) strategies.
