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Virtu Financial (VIRT) Eyes RFQ-hub Growth, Forms Consortium

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Virtu Financial, Inc. VIRT recently announced that the company officially formed the RFQ-hub Holdings LLC, which is expected to stimulate growth for its RFQ-hub platform. The market-leading financial services firm roped in some big names to create a consortium for the new entity.

Citadel Securities, Flow Traders and Jane Street Capital are expected to provide liquidity to create a growth path for the new entity. Further, VIRT has an asset management firm BlackRock, Inc. BLK and a multi-dealer trading platform MarketAxess Holdings Inc. MKTX in the project.

The “bilateral multi-asset and multi-dealer Request for Quote platform” is expected to gain heavily from MarketAxess’ rich experience in the market. MKTX provides institutional investors with access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives and various other fixed-income securities. MKTX is expected to own a minority stake in the RFQ-hub platform, a crucial workflow product from VIRT.

The platform assembles liquidity providers and asset managers to furnish a streamlined workflow and better pricing on a range of products. The creation of the consortium is expected to boost the entity by advancing the development of a global institutional platform. It will improve efficiency in finding the best price for the listed and OTC securities. The move can elevate RFQ-hub’s global footprint.

Virtu Financial’s strength in the Execution Services segment augurs well for the long haul. Its focus on improving workflow technology and analytics is expected to help grow the top line. In 2020, revenues from this segment grew 32.2% year over year. However, the same decreased to some extent in 2021 and during the first quarter of 2022. We expect the metric to bounce back soon on the back of continued growth initiatives for workflow products.

Price Performance

Shares of Virtu Financial have declined 7.8% in the past six months compared with the 20% fall of the industry it belongs to.

Zacks Rank & Key Pick

Virtu Financial currently has a Zacks Rank #3 (Hold). A better-ranked stock in the Financial - Miscellaneous Services space is Alerus Financial Corporation ALRS, which currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Alerus Financial’s bottom line for 2022 is pegged at $2.48 per share. ALRS has witnessed three upward estimate revisions in the past 30 days against none in the opposite direction. ALRS’s earnings beat estimates in each of the last four quarters, the average being 26.8%.

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BlackRock, Inc. (BLK) : Free Stock Analysis Report
MarketAxess Holdings Inc. (MKTX) : Free Stock Analysis Report
Virtu Financial, Inc. (VIRT) : Free Stock Analysis Report
Alerus Financial (ALRS) : Free Stock Analysis Report
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