Flow Traders Said to Prepare IPO of Dutch High-Frequency Firm

(Bloomberg) — High-frequency trading firm Flow Traders BV is preparing for an initial public offering that could value the company at more than 1 billion euros ($1.13 billion), people with knowledge of the matter said.

Flow Traders is working with Rothschild and interviewing other banks to help manage the sale later this year, said the people, who asked not to be identified because the matter is not public. The Amsterdam-based company hasnt decided if it will sell its shares in the U.S. or Europe, the people said.

A successful listing would mark a change in the fortunes of high-speed traders. In April, New York-based Virtu Financial Inc. postponed its planned IPO amid the unprecedented scrutiny of electronic markets spurred by the publication of Michael Lewiss Flash Boys and investigations by the New York attorney general and federal regulators.

Those cases have so far mostly turned up charges of bad behavior at private venues known as dark pools, rather than high-frequency firms. Meanwhile, Virtu is hoping to go public later this year, people with knowledge of the matter have said, and a study published last week by researchers at the Bank of England found electronic trading makes stock markets more efficient.

Spokesmen for Flow Traders and Rothschild declined to comment.

Trading House

Flow Traders was founded in 2004 and sold a stake four years later to buyout firm Summit Partners. It explored a sale in 2012 but decided to stay independent when it couldnt find a buyer, according to reports at the time.

The firm describes itself on its website as a leading international proprietary trading house with more than 200 employees worldwide and other offices in New York, Singapore and Cluj, Romania. It specializes in market-making exchange-traded funds, according to the site.

Virtu last week updated its financial statements in regulatory filings, to show the 148-person company had revenue of $723 million and net income of $190 million in 2014. Virtu had last year been seeking a valuation of about $3 billion before it shelved the IPO amid the uproar following the publication of Lewiss book, which argues high-frequency traders are rigging markets.

Flow Traders would be one of the few publicly-owned electronic trading firms. New York Stock Exchange-listed KCG Holdings Inc. was formed in mid-2013 after high-frequency trader Getco LLC merged with Knight Capital Group Inc. The companys shares have gained 20 percent since the deal.

To contact the reporters on this story: Matthew Monks in New York at mmonks1@bloomberg.net; Ruth David in London at rdavid9@bloomberg.net; Sam Mamudi in New York at smamudi@bloomberg.net To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net Mohammed Hadi, Elizabeth Fournier