HFT Flow Traders enjoys Brexit boost

In its financial results, announced on August 12, the company said net trading income had reached €67.9 million in the three months ending June 30, compared with €65 million in the first three months of the year.

Performance was boosted by activity on June 24, Flow Traders said, noting that despite the high volumes all of its systems had performed as expected.

However, the company said that a “continued risk-off sentiment” in capital markets had resulted in declining volumes in equities, and an uptick in fixed income.

It traded €142 billion worth of exchange-traded products – which account for the bulk of its trades – in the second quarter of the year, a 6% decrease on the first quarter of 2016.

Sjoerd Rietberg, co-chief executive of Flow Traders, said: “Our business continued to perform very well in the second quarter of 2016, which was characterised by a rather low trading activity and low volatility for most of the quarter, before the referendum on Brexit.”

He added: “The typical trend we saw in 1Q16 and the quarters before, with trading concentrated in more liquid products, plain vanilla ETPs with typically tighter spreads, continued, but we saw a change of direction following the Brexit referendum outcome. After the 24th of June, a strong peak in volatility and volumes triggered a lot of trading activity, something we were all prepared for.”

Flow Traders was founded in 2004 in Amsterdam. It floated on Euronext’s Dutch market in June 2015, following in the footsteps of US-based firm Virtu Financial, which became the first electronic trading firm to launch an initial public offering in April 2014.

Virtu said during its second quarter earnings on August 3 that the Brexit vote had an impact on its revenues during the period.

Doug Cifu, Virtu’s CEO, told analysts on August 3 that the “results of the UK referendum on the EU produced heightened levels of activity in the final two trading days of the quarter”, though he added it “did not change the overall tone of the volume and volatility” in the period.

Other trading firms and venues benefited from a boost in volumes on the day after the referendum. Buyside-only dark pool operator Liquidnet posted its highest ever European equity trading volumes on the day after the vote, boosting volumes to a record level for the second quarter.

Liquidnet handled European equity trades worth $ 44.3 billion in the second quarter, up 50% from a year earlier and 9.6% up on the first quarter of 2016, the firm’s previous record quarter, when it handled $ 40.4 billion.

Tim Cave contributed to this story

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