Pretty big news from the other side of the Atlantic. High speed trading firm DRW Trading has bought smaller rival Chopper Trading. DRW is a giant in the high frequency industry and one of the largest prop trading firms in the Chicago – and the world.
A few years ago the firm, founded by legendary trader Donald R. Wilson (“DRW”), came in conflict over interest options with the CFTC. And from my perspective, they are right.
If you want loyalty, buy a dog
DRW is founded in 1992 and employs some 500 people – with offices around the world. Chopper Trading is smaller (200 employees) and younger. Raj Fernando founded the firm in 2002. Instead of his initials, he has chosen to name his firm after his dog. And well, Don Wilson buys it.
Financial details of the merger haven’t been released.
Bad sign for Chopper
These kind of deals between trading firms aren’t very common, and when they do : it usually isn’t a good sign. At least one of the newly weds is often begging to be saved. Another era, but I remember Saen Options (2009). More recently, Knight Trading wasn’t in perfect shape either.
In this case, Chopper approached DRW. Another sign of trouble for Chopper was the decision a few months ago (November 2014) to shut down the European trading operations. Regulatory burden, sure – but only a burden amidst disappointing results. A year earlier Chopper has been fined by the CME. A tiny $20.000 for excessive orders on the E-Mini Dow futures on Globex on two occasions.
But that’s just speculation. Maybe some shareholders in Chopper felt like gardening and decided to cash out. Or spend more time on charity. Saving animals. Maybe. This Raj Fernando is serious about taking care of dogs by the way. I like this guy.
- Some background on Crain’s