Flow Traders Rises After Raising $579 Million From IPODavid de Jong
Flow Traders BV raised 521 million euros ($579 million) in an initial stock sale, Europe’s biggest offering by a high-frequency trader. The shares jumped.
The company’s owners sold 16.3 million shares at 32 euros apiece, just below the middle of the range used to canvass investor interest. Shares rose as much as 10.3 percent to 35.30 euros as of 9:38 a.m. in Amsterdam on Friday, valuing the firm at about 1.65 billion euros.
Flow Traders belongs to a cadre of Dutch firms -- alongside Optiver and IMC BV -- that count among the world’s largest computer-driven traders. Like most, it trades for its own benefit rather than on behalf of external customers.
“This is part of a wider move, where you’re seeing the main HFT firms becoming much more institutionalized,” Rebecca Healey, market structure analyst at Tabb Group LLC in London, said before the IPO price was announced. “They’ll need significant investments to be able to stay ahead of the game.”
The company handled 527 billion euros of exchange-traded products in 2014, generating 172.7 million euros in net trading income and 67.9 million euros in profit. Flow Traders was founded in 2004 by Jan van Kuijk and Roger Hodenius, both traders from rival Optiver, and sold a stake to buyout firm Summit Partners LP four years later. It employs more than 200 and has offices in New York, Singapore and Cluj, Romania.
Flow Traders follows Virtu Financial Inc., which raised $314 million on the Nasdaq stock market in April. That share sale, initially planned for last year, was postponed after author Michael Lewis published “Flash Boys: A Wall Street Revolt,” which criticizes high-frequency trading.
Over the past 10 years, computerized trading has become a dominant form of trading. In the U.S. and Europe, it now accounts for about half of all trades, according to the U.S. Securities and Exchange Commission. While it can contribute to the efficiency of markets, there are concerns that rapid-fire orders add to instability and can be used to rig markets.
The SEC stepped up scrutiny of high-speed trading following the “flash crash” in 2010, in which the Dow Jones Industrial Average plunged 700 points before rebounding sharply. The regulator is now developing new rules for automated trading. In the European Union, high-frequency trading faces tighter risk controls starting in 2017 under proposals that seek to prevent disorderly markets.