Skip to Content

Press Release

Printer Friendly Version View printer-friendly version
<< Back
NEW KCG TRADING ANALYSIS DEMONSTRATES SPEED IS IMPORTANT FOR ALL INVESTORS, INCLUDING LONG-TERM INVESTORS


NEW KCG TRADING ANALYSIS DEMONSTRATES SPEED IS IMPORTANT FOR ALL INVESTORS, INCLUDING LONG-TERM INVESTORS

JERSEY CITY, New Jersey - November 25, 2014 - KCG Holdings, Inc. (NYSE: KCG) today announced that it has issued its market commentary, "The Need for Speed: It's Important, Even for VWAP Strategies" by Phil Mackintosh, Head of Trading Strategy and Analysis. The report analyzes how long-term investors who leverage fast technology, such as smart routers and low latency networks, improve execution performance across various strategies - even for a VWAP (Volume Weighted Average Price) strategy.

The report focuses on the benefits queue priority offers long-term investors, further highlighting the fact that executional speed and performance impacts all market participants.

"There is often a perception in the market that speed only benefits aggressive, short-term traders, however we found institutional investors also benefit from faster trading executions," Mr. Mackintosh said. "Investors need to be smart, as well as fast, to make informed decisions and it is critical that long-term investors invest in technology to avoid the hidden costs associated with algorithms that are not optimized for the current market environment."

Key findings from the commentary include:

  • KCG used a simple single venue model to show how poor queue priority reduces spread capture and increases adverse selection.
     
  • The same logic applied to two long-term buyers trying to achieve VWAP shows that the buyer using the fastest routing achieved a better VWAP.
     
  • Using data for all stocks traded YTD on NASDAQ and NASDAQ BX, KCG found real data supported the model and found that orders that were deeper in the book when they were filled suffer from worse mark-out, measured as the movement in the mid after the fill.
     
  • Market complexity, such as inverted exchanges and dark pools, can also help traders achieve queue priority.

             
"In addition to speed, optimal execution strategy requires being a smart informed investor," observed Mr. Mackintosh. "It requires understanding the current depth of book at each venue and where the stock is likely to trade; weighing the trade-off between venue cost and spread capture; considering order types; and understanding how routing strategy can affect queue position."

"The Need for Speed: Its Important Even for VWAP Strategies" is part one of a two-part series on the benefits of informed order management.

KCG's Trading Commentary is available at https://www.kcg.com/our-views

About KCG
KCG is a leading independent securities firm offering investors and clients a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with exceptional client service across market making, agency execution and venues. KCG has multiple access points to trade global equities, fixed income, currencies and commodities via voice or automated execution. www.kcg.com

Certain statements contained herein may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," "positions," "prospects" or "potential," by future conditional verbs such as "will," "would," "should," "could" or "may," or by variations of such words or by similar expressions. These "forward-looking statements" are not historical facts and are based on current expectations, estimates and projections about KCG's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with: (i) the strategic business combination (the "Mergers") of Knight Capital Group, Inc. ("Knight") and GETCO Holding Company, LLC ("GETCO"), including, among other things, (a) difficulties and delays in integrating the Knight and GETCO businesses or fully realizing cost savings and other benefits, (b) the inability to sustain revenue and earnings growth, and (c) customer and client reactions to the Mergers; (ii) the August 1, 2012 technology issue that resulted in Knight's broker-dealer subsidiary sending numerous erroneous orders in NYSE-listed and NYSE Arca securities into the market and the impact to Knight's business as well as actions taken in response thereto and consequences thereof; (iii) the sale of KCG's reverse mortgage origination and securitization business, pending sale of KCG's futures commission merchant and the pending strategic review of KCG Hotspot; (iv) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by regulators, the New York Attorney General, Congress and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems manner of operations, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (v) past or future changes to organizational structure and management; (vi) KCG's ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG's customers and potential customers; (vii) KCG's ability to keep up with technological changes; (viii) KCG's ability to effectively identify and manage market risk, operational and technology risk, legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (ix) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; and (x) the effects of increased competition and KCG's ability to maintain and expand market share. The list above is not exhaustive. Readers should carefully review the risks and uncertainties disclosed in KCG's reports with the SEC, including, without limitation, those detailed under "Risk Factors" in KCG's Annual Report on Form 10-K for the year-ended December 31, 2013, under "Certain Factors Affecting Results of Operations" in KCG's Quarterly Report on Form 10-Q for the period ended September 30, 2014, and other reports or documents KCG files with, or furnishes to, the SEC from time to time.

CONTACTS

Sophie Sohn Jonathan Mairs
Communications & Marketing Investor Relations
312-931-2299 201-356-1529
media@kcg.com jmairs@kcg.com

HUG#1874249
Printer Friendly Version Print PageE-mail this page E-mail PageRSS RSS Feeds

Share Page

X
E-mail Alerts Receive E-mail AlertsView contacts Media Contact