The excesses of high-frequency trading in a global oligopoly

Being at the forefront of trading without being the fastest was, from its inception, the bet of XTX. The firm does not see itself as a traditional high frequency (THF) trader with a junk on speed like Virtu, Jump Trading, Optiver or DRW. “We don’t have trading strategies where speed is the key to success. We forecast prices, execute orders according to our strategies and then take risks. We rely on our internal research, which involves risk-taking on the markets, the accumulation of data and the know-how of our employees who develop trading algorithms ”, explains Geoffrey Damien, CEO of XTX France.

XTX takes risks on its balance sheet sometimes for several days. For example, she owns the shares that investors sell her the time to analyze the market and find the opportunity to resell these securities later at a small profit. It is the accumulation over time of these modest profits that constitutes its income. The firm does not need to sell these securities immediately, which could generate strong price movements if such quantities suddenly arrive in the market. This is what differentiates XTX from THFs, which typically don’t hold positions for more than a minute and often just a few seconds. At the end of the day, THFs are supposed to have no stock of shares.

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