Michael Lewis's tale of flash trading in the US may have an Irishman at its heart, but it's not the only Irish link with the use of super-fast computers, high-speed data networks, and complex algorithms to make money. A little hub of high-frequency traders has also set up home in Dublin's docklands.
Names such as Virtu, Susquehanna, and Geneva Trading all have sizeable operations in Dublin, while technological providers such as Corvil, ITG and Lab49 have also set up shop here.
According to one industry player, Ireland’s low corporation tax rate and easy access to European markets is one reason why such companies would decide to set up shop in Dublin.
Another possibility he cites, however, is that, in days gone by, getting regulated in Dublin by the then regulator (Ifsra) would have been an easier task than getting the approval of the Financial Services Authority (now known as the Financial Conduct Authority) in London.
While this may no longer be the case, given the changes the Central Bank has undergone, the legacy remains. And a Dublin address may also allow trading companies, which typically like to remain under the radar, to attract less unwarranted attention than they might have done in London.
Substantial volumes
One of the largest proponents of high-frequency trading globally is Virtu, which decided in 2013 to consolidate its European operations in Dublin, following its merger in 2011 with Madison Tyler.
All of its EMEA market making and trading activities – which are “characterised by substantial volumes, an emphasis on technology and certain other characteristics that are commonly associated with high frequency trading” – are now conducted out of its Dublin operation on Sir John Rogerson’s Quay, where it employs about 30 people.
The company, which announced last month that it would seek to raise $100 million by listing on Nasdaq, was this week reported to be considering a short deferral following the unprecedented scrutiny into high-frequency traders that is now underway. The fact that Virtu uses the IEX exchange that is actively slowing down the trading cycle was not enough to see it avoid the firestorm following the publication of Michael Lewis's book, Flash Boys : A Wall Street Revolt .
But its IPO filings nonetheless offer an insight into the type and scale of the business high-frequency traders engage in.
In its filing, the company claims that it posted just one day of trading losses in five years of operation, and that its operations team are “substantially identical” across its four offices, in New York, Austin, Dublin and Singapore.
Well-paid employees
The filing also gives an insight into the money that can be made in the business – back in 2011, its Dublin revenues came in at just $26 million (€18.9 million): last year, it had grown to $129.7 million, accounting for a fifth of the company's revenues, and making it the largest site for Virtu outside of the US.
Jobs with such companies are typically well-paid and often don’t require a background in finance, but you may have to play your cards right to get hired.
Susquehanna, for example, used to stage poker nights with prize money of €10,000 to attract the right candidates, and it still places a lot of importance on the card game, which it deems to be similar to the kind of trading the company engages in.
Indeed, if you get taken on by the trading group, you’ll come across poker sessions which are used to “hone your decision-making skills and teach you to employ a mathematical approach to the decisions you make” as part of your training.
