Virtu quarterly profit tops views on expenses, higher trading volumes

NEW YORK (Reuters) - Virtu Financial Inc VIRT.O on Friday reported better-than-expected third-quarter profits, helped by lower expenses and higher trading volumes amid pandemic-driven volatility and an ongoing surge in market participation by retail investors.

Virtu, one of the world’s largest market makers, provides a nearly continuous stream of buy and sell quotes in global assets, including equities, options, and fixed income, for investors to trade against, profiting from bid-ask spreads. The company also executes trades for institutions, banks and broker dealers.

The New York-based company earned $199.7 million, or 92 cents per share, in the quarter, compared with a loss of $5.2 million, or 4 cents per share, a year earlier, which was due in part to costs from Virtu’s $1 billion acquisition of brokerage ITG.

Stripping out one-time items, Virtu earned 81 cents per share, 9 cents above the mean estimate by analysts, according to IBES data from Refinitiv.

The beat came largely from better-than-expected operating expenses, Jefferies analyst Daniel Fannon said in a client note.

Trading income was $441.3 million for the quarter, just over double the year-earlier amount, boosted by higher engagement from retail investors.

The fourth quarter is looking strong as well, with volumes up due to the U.S. elections, Virtu Chief Executive Officer Doug Cifu said on a call with analysts.

“Obviously there is a good deal of uncertainty still around election results both at the White House and the Senate and whatnot, so there will continue to be some volatility, but as the market gets more conviction around that, I’m excited that we’re seeing increased volumes,” he said.

Overall revenues increased 71.6% to $656.1 million, driven by the heightened volatility and a $56.2 million gain from the sale of Canada-based trading platform MATCHNow to exchange-operator Cboe Global Markets CBOE.Z.

Reporting by John McCrank; Editing by Jane Merriman and Paul Simao