The 10 biggest HFT firms in the world (BTW, HFT stands for high frequency trading for those not in the know) have heralded significant changes in the way traders around the world do business, by sheer technology.
Ever since financial markets were created, traders have always sought ways to beat the competition in landing the most profits possible. And in a long line of techniques, both legal and illegal, that have netted huge amounts of money for traders, high frequency trading is one of the latest. High frequency trading involves the use of a program trading platform with complex algorithms that analyze multiple markets. With the help of powerful computers, high frequency trading detects advantages in markets, executes large amounts of transactions, and conducts those with fast execution speeds, with the hopes that the speed will result in greater profits.
High frequency trading is a relatively new field of trading (with less than ten years in existence), but a controversial one, as other companies claim that there is something abusive about this practice that leaves ordinary investors at a disadvantage. In fact, high frequency trading companies have been subject to numerous criticisms and even investigations. However, as the rest of the market became aware of the use of technology for trading, the advantages of high frequency trading have diminished over time. In fact, this year, a lot of well-known figures in the high frequency trading field ended up resigning from their posts, citing thinning margins.
For those who prefer to rely on more established investors, such as hedge funds, Insider Monkey has a list of the 10 largest hedge funds in the world and their favorite stock picks.
While most news coverage is focused on the perceived demise of high frequency trading, other notable websites such as Planet Compliance and eFinancial Careers have provided an in-depth look at high frequency trading companies, their financial statistics, and even how lucrative the salaries are in those companies. Though we note that some of those figures may change dramatically given the state of the HFT industry, we verified a lot of the financial statistics on those HFT companies, and they were more or less accurate, more so in the case of the two public companies included in this list.
As a vast majority of HFT firms are private, only nine companies have clearly disclosed financials. Among those HFT companies with undisclosed revenue, the one company we included in this list has the biggest ongoing HFT operation based on assets under management.
Nine of the 10 biggest HFT firms in the world, which are Citadel Securities, Flow Traders NV, GSA Capital Partners LLP, IMC Trading BV, Jump Trading, KCG Holdings Inc. (NYSE:KCG), Maven Securities, Optiver Holding BV, Tower Research Capital, and Virtu Financial Inc (NASDAQ:VIRT), are ranked on this list according to the yearly revenue pulled in during their most recently reported year. Check out the list beginning on the next page.