A high-frequency trading firm founded less than two years ago by former Citigroup executives is ending operations as the industry confronts a slowdown.
The firm, Eladian Partners, was started in early 2011 by two pioneers in high-speed trading, Steve Swanson and Peter Kent. It grew to more than 50 employees and had offices in New York, London and South Carolina that were focused on buying and selling stocks and exchange-traded funds.
A spokeswoman for the company confirmed the the firm had shut down “due to market conditions.â€
High-speed trading firms have come to dominate trading in American stocks over the last decade with sophisticated computer programs that allow them to hop in and out of positions, taking advantage of small changes in prices. They have recently faced scrutiny from regulators and politicians, who have worried that the traders have an advantage over traditional investors.
There are growing signs that the business of high-spee d trading, or electronic market-making as it is sometimes called, is shrinking because of the steadily declining volume on the world's stock exchanges over the last four years. At the same time, the demands of keeping up with the quickly evolving technology have eaten away at the bottom line.
The brokerage Rosenblatt Securities estimated that the profits these firms earn this year from trading American stocks will be down 35 percent from last year and 74 percent from 2009, at the industry's peak.
Doug Cifu, the president of another high speed firm, Virtu Financial, said Tuesday that “Eladian's failure demonstrates how difficult it is for market making firms to prosper in current market conditions.â€
Neither of Eladian's founders was available to comment on the decision to close the firm.
Mr. Swanson and Mr. Kent both helped build one of the first major players in the high speed industry, Automated Trading Desk. It was sold to Citi in 2007 for $680 million and became a central part of that bank's trading operations.
Mr. Swanson and Mr. Kent initially stayed on at Citi, but left in 2010, not long before founding Eladian.
On its Web site, the company had stated that: “Trading in today's market requires exceptional talent and experience coupling superior technology with a unique and innovative approach to trading. Eladian Partners is a global multi-asset class trading firm built on cutting edge technology combined with sophisticated quantitative trading strategies.â€
By the end of Tuesday, the company Web site had been taken down.
