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2 of the biggest high-speed trading firms are joining forces in a deal that's a 'sign of the times'
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New York-based Hudson River Trading is set to acquire Chicago rival Sun Trading, the two companies announced Tuesday.
Consolidation is a trend in the trading industry amid low volatility and a lack of profit opportunities.
Hudson River Trading, a New York-based trading firm, is going to acquire Chicago rival Sun Trading, the two companies announced Tuesday.
“Sun Trading is a highly regarded market marking firm with an approach to trading that is complementary to HRT’s,” said Jason Carroll, cofounder and managing director of Hudson River Trading, in a statement. “This acquisition combines HRT’s expertise in on-exchange trading with Sun’s expertise in off-exchange trading creating a stronger, more diverse firm."
The merger, according to the statement, is pending regulatory approval and is set to close this quarter.
Richard Repetto, an analyst at Sandler O'Neill + Partners, told Business Insider the merger is a "sign of the times."
"With the record low volatility, HFT firms are seeking scale benefits and the resultant efficiencies to drive their businesses," he said in an email.
Trading firms like Sun and Hudson River do best when the markets see more price swings, but when they are calm as they have been over the last year, profit opportunities are harder to come by.
In such an environment, consolidation has become an attractive option for trading firms.
"The case for principle trading firms combining forces is only getting stronger," said Kevin McPartland of consultancy Greenwich Associates.
Notably, high frequency trading firm Virtu Financial acquired rival KCG Holdings in an all cash transaction for $1.4 billion.
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