US electronic market maker, Virtu Financial Inc., today reported lower-than-expected second-quarter earnings, having made $108.9 million in Q3 net income compared to $335.3 million in the prior year quarter.
Excluding one-off items, Virtu profit decreased 64.0% to $122.3 million for this quarter, compared to $340.0 million for the same period in 2020.
New York-based Virtu’s downbeat performance was impacted by lower trading volumes in U.S. equities. Specifically, net trading income nearly halved to $384.8 million in Q3 2021, compared to $744.0 million for the same quarter in 2020.
Total revenues also decreased 39.4% to $549.0 million for this quarter, compared to $905.9 million for Q2 2020, when volumes were significantly elevated due to the COVID-19 pandemic.
Basic and diluted earnings per share for Q3 was $0.51 and $0.51 respectively, compared to $1.58 and $1.59 per share in Q3 of 2020.
“Our results reflect our resilient and balanced business model, against a backdrop of more muted market activity in the second quarter. Our growth initiatives continue to produce steady results, especially in options where our business increased overall despite the decline in market volumes,” said Douglas Cifu, CEO of Virtu Financial.
Other business highlights show that adjusted net trading income decreased 48.9% to $341.8 million, down from $668.7 million a year earlier. Adjusted EBITDA also dropped 59.4% to $197.3 million for this quarter, compared to $485.8 million for the same period in 2020.
Virtu Financial has two operating segments: market making and execution services, and one non-operating corporate segment. Market making principally consists of market making in the cash, futures and options markets across equities, fixed income, currencies and commodities.
Meanwhile, execution services comprise agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of banks and broker dealers. The corporate segment contains the company’s investments, principally in strategic trading-related opportunities, and maintains corporate overhead expenses.
Last year, Virtu Financial completed the sale of Canada’s largest ‘dark pool’ stock trading platform, MatchNow, to Cboe Global Markets for an undisclosed price.
The deal was initially signed nearly 14 months after Virtu Financial Inc. acquired MatchNow. This was part of its $1-billion buyout of electronic brokerage Investment Technology Group in March 2020.
Virtu Americas LLC (formerly KCG Americas LLC) is also operating another alternative trading system, called Virtu MatchIt.
Virtu makes markets with over 25,000 financial instruments, at more than 235 venues, in 36 countries worldwide, continuously quoting buy and sell prices for others to trade against, profiting off the bid-offer spread and using high-frequency trading (HFT) strategies.