High-speed trading firm Virtu Financial jumps in market debut

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(April 16): Shares of electronic trading firm Virtu Financial Inc rose as much as 24.6 percent in their debut in a sign that public angst over "high-frequency" trading is waning.

Virtu Financial's shares touched a high of $23.67 on Thursday on the Nasdaq, valuing the market maker in equities, fixed income, currencies and commodities at about $3.23 billion.

The company postponed its IPO last year, following the release of Michael Lewis's "Flash Boys: A Wall Street Revolt", a book that questioned whether markets were rigged in favor of high-frequency traders.

Virtu Financial earns money through "spreads" - the difference between what buyers and sellers are willing to pay or accept in a trade.

The initial public offering of 16.5 million Class A shares was priced at the top end of the expected range of $17-$19 per share, raising about $314.1 million.

Founder Vincent Viola, a former chairman of the New York Mercantile Exchange, will control Virtu though his ownership of Class D shares, which have more voting power than ordinary shares.

Virtu Financial's competitors include large broker-dealers such as Bank of America Merrill Lynch and Citigroup Inc , as well as niche players such as Citadel, KCG Holdings, Timber Hill and Wolverine Trading.

Virtu Financial's strong first-day pop suggested that investors were not put off by regulatory concerns over high-speed trading.

The U.S. Securities and Exchange Commission proposed in February that high-speed stock trading firms that execute transactions away from exchanges be subject to greater regulatory oversight.

The plan is expected to affect Virtu Financial and others such as Jump Trading and Tradebot.

The SEC intensified its review of high-frequency traders following the "flash crash" in 2010, in which the Dow Jones Industrial Average plunged 700 points before rebounding sharply.

Virtu Financial said in its IPO filing it expected to pay its first dividend of 24 cents per Class A share in the third quarter. The company intends to fund its dividends from cash generations from operations. (http://bit.ly/1OHEbgU)

The company's revenue rose 8.8 percent to $723 million in 2014, while net income rose 4.3 percent to $190 million.

Goldman Sachs Group Inc, JPMorgan Chase & Co and Sandler O'Neill + Partners LP were among the underwriters for the offering.