Virtu Says CFTC Looking Into Trading Incentives From MarketsSam Mamudi
Virtu Financial Inc., the automated trader that today released plans for selling stock, said U.S. derivatives regulators are looking into its trading practices.
The U.S. Commodity Futures Trading Commission asked about the company’s “participation in certain incentive programs offered by exchanges or venues” from July 2011 to November 2013, Virtu said in its initial public offering document today. Virtu said it doesn’t believe it broke the law, “but we cannot predict the outcome of the inquiry.”
Steve Adamske, a spokesman for the CFTC, declined to comment. The agency oversees derivatives trading in the U.S.
The disclosure comes amid a public debate about the fairness of incentives paid in another segment of the U.S. financial system: the stock market. Equity exchanges pay firms to provide liquidity while charging traders who execute against those orders. Jeff Sprecher, whose IntercontinentalExchange Group Inc. purchased the New York Stock Exchange in November, says that system, known as maker-taker, should be abolished.
The CFTC’s jurisdiction covers separate territory. Last year, it announced that it’s reviewing practices at high-speed trading firms, requesting public comment on an industry that includes Virtu. The concept release approved by the CFTC in September is a first step toward creating new regulations for the business.