Ronin Capital, the Chicago-based proprietary trading, posted strong profits in its European operations in 2011. The news comes at a time when many of its US peers are reviewing their operations in the region.
The group reported that revenues in its European operations increased by over 4% to £76.1m for the year ended December 31, 2011, according to accounts filed with Companies House last week. Overall profits fell marginally to £22.9m, the filings showed.
The group operates through two subsidiary partnerships in Europe, Ronin Trading UK LLP, which was responsible for 28% of its European profits,and Ronin Trading Europe LLP, which was responsible for the remainder. The entities employed around eight staff last year, the filings show. The Wall Street Journal reported earlier this year that the group’s global headcount was over 300.
Ronin Trading Europe was established in late 2010, and the group transferred all of its European exchange-traded equities, fixed income and derivatives trading activities to the division in March 2011, from Ronin Trading UK LLP, company filings show.
Since it was established, the Europe entity has become a member of the London Stock Exchange, NYSE Euronext, Eurex, and, most recently in February, the Six Swiss Exchange.
Financial News reported earlier this month that global proprietary trading firms, many of them based in the US prop trading heartland of Chicago, were reviewing their operations in Europe, amid uncertainty over the possible introduction of a financial transactions tax and a backlash from dealers and buyside firms against some high-frequency trading practices.
Ronin Capital is one of a handful of firms that use its own capital and heavily quantitative, computer-driven techniques to trade across markets in fractions of a second. The strategies of the firms include market-making, as well as statistical arbitrage techniques designed to extract profits from discrepancies in prices across different securities and platforms.
According to reports in the WSJ in February, Ronin was responsible for thousands of mistaken stock-options on NYSE Euronext’s Amex market. The group was behind approximately 31,000 erroneous transactions made over three minutes, many executed at prices far off the going market rate, the WSJ reported.
The episode underscored the potential pitfalls of electronic trading amid efforts by regulators to tighten up practices and improve supervision of the sector.
At the start of this month, super regulator the European Securities and Markets Authority implemented new guidelines on automated trading, requiring firms like Ronin to carry out pre-trade risk checks and trade reporting, as well as register with national regulators such as the Financial Services Authority.
In response, a number of proprietary firms have bolstered their compliance teams in recent months, includingGetcoEurope, Spire Europe and Hudson River Trading Europe.
Ronin Capital is looking to add to its team in London with the addition of a compliance and operations manager, according to a job posting on its website. The posting said the person will be responsible for the oversight and administration of the UK Office’s day-to-day operations, and will be the lead contact with the FSA.
Ronin Capital could not be reached for comment.