Posted by & filed under Failing Managed Funds, Hedge Funds, Banks.

Alex Gerko (CEO and Founder of XTX) whose Kings Cross office includes a replica Apollo 11 landing capsule, arcade machines and a hallway with more than 30, 000 LEDs generating cell life cycle simulations, has amassed a net worth of $700 Mio according to the Bloomberg Billionaires Index.

What may surprise you is that XTX make money not as a tech startup but as market-makers.

Between years 2015 and 2018, XTX’s revenue has quadrupled from $72 Mio to $305 Mio. Now they have plans to expand beyond Europe with offices in Singapore, New York and Paris. There are not only expansion plans with news products added included U.S equities and Treasuries.

Data from LinkedIn shows its workforce comprises of majority computer science backgrounds. An overwhelming 34% of employees studied computer science with only 10% studying finance.

The standout feature is that XTX employs no human traders

XTX refers to a mathematical formula used in its trading algorithms — relies on data analytics and massive computing power.  The website states 42 petabytes of usable storage and 85 terabytes of RAM (Random Access Memory) which enables them to handle more than $150 Bio daily trading volumes within Equity, FX, Fixed Income and Commodity markets

Larry Tabb, founder of research firm Tabb Group LLC, mentioned since all the business is electronified, “all they really need to do is connect to the various platforms and they can make markets”. Furthermore, he states they don’t need to turn to Apple or IBM for cash management business. Smaller market makers have the advantage compared to bigger banks due to their ability to “quickly adapt technology and strategies” and agilely invest.

According to Bloomberg, XTX dropped to fourth from third in global market share, according to the Euromoney survey. Meanwhile, JPMorgan Chase & Co. ranked first, followed by Deutsche Bank, which rebounded from No. 8.

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