Spire Europe, one of the region’s fastest growing high-frequency trading firms, has hired a former compliance officer from Bats Chi-X Europe, as the specialist trading houses move to bolster their regulatory expertise ahead of greater oversight of their activities.
Spire Europe is a division of the US hedge fund, Tower Research Capital, and is one of a handful of firms that use computer-driven, highly quantitative techniques to profit from tiny price discrepancies in securities across different venues. The activity of these firms is believed to account for as much as 60% of activity on European markets, according to analysts.
Spire has enjoyed prodigious growth and last year it was the second most-active proprietary trading firm on Nasdaq OMX’s Nordic markets – one of the only operators to disclose the activity of its member firms.
The firm is also believed to be one of the most-active arbitrageurs of securities listed on the London Stock exchange’s international order book, which includes mainly Russian depository receipts, and Micex, the Russian stock exchange.
It posted a six-fold increase in revenues during 2010, its second year of active trading, from £5m to £32.1m, according to company filings. Its pre-tax profits increased from £3.1m to £22m, the accounts showed.
The firm only employed six people at the end of that year, the filings show, in a headcount-light model replicated at many other high frequency trading firms. However, these staffing levels are expected to rise as greater regulatory scrutiny over high-frequency trading necessitates a bolstering of regulatory and compliance teams.
New guidelines on automated trading drawn up by the European Securities and Markets Authority, to be implemented from May 1, represent the first time HFTs will directly be brought under the auspices of European regulation.