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High-frequency trading company Tower Research Capital is planning to launch funds for external investors as it appears to change beyond its ultra-fast strategy that has become a big player in the global stock market.
Tower’s funds aren’t the second most common in the industry and hold investment positions for hours or days at a time, people familiar with the issue say. This marks one of the first examples of large, fast, proprietary trading shops that open products for external investors.
Founded in 1998 by former Credit Suisse fixed income trader Mark Gorton, the New York headquarters is set to launch the fund later this year, one of the people said.
Tower declined to comment.
After the 2008 financial crisis led banks to withdraw from market production activities and strict regulations were introduced, Towers and other highly secret trading companies became the dominant forces on Wall Street.
Most often, they use complex algorithms to exploit small price inconsistencies, to exploit stock patterns, to make very small trades with options that can last just 10 millionth of a second. Citadel Securities alone processes more than $4500 billion in transactions daily, including almost a quarter of US stock trading.
Some of the largest trading companies have expanded to the market in recent years due to government and corporate bonds. However, so-called medium frequency strategies in stock trading are beginning to take on a larger share of revenue, with companies increasingly holding positions minutes, hours or days before closing.
“If you’re really good at mining gold, why are you just sticking to mining gold?” David Lariviere, a professor of financial engineering at the University of Illinois, said he previously worked for the US market maker GTS.
“As the market becomes more efficient, knowledge of methods is [high-frequency trading] He added, removing barriers that existed around the niche, removing lucrative transactions, forcing businesses such as towers to expand their business, mimicking multi-strategic funds, including millennium management.
“There’s a finite number [limit] Someone close to Tower said:
They added: [parts of the market]. It has logical meaning for businesses like towers that move progressively, focusing only on short-term ends. [the] spectrum. “
Before establishing Tower, Gorton developed the Limewire file sharing platform, which was shut down by US authorities in 2010. Most recently, he donated money to a pro-consing pricing campaign in New York, supporting the hyper-political action committee that supports the President of Robert F. Kennedy JR.
