Non-banks charge ahead, but HFTs see warning signs
New risk-warehousing models are outpacing non-bank players that rely on latency advantages
The non-bank market-maker pack is splitting into two camps, with a handful of shops choosing to become risk-warehousing entities, acting as platforms for banks, while the remainder stick to traditional, high-frequency trading (HFT) techniques.
The emergence of the new business model for firms such as XTX Markets, Citadel and KCG is a departure from the latency arbitrage space, where returns and margins have been under extreme pressure for several years.
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