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Virtu CEO hints at job cuts after ITG acquisition closes

Virtu Financial Inc. may once again cut staff after it completes its acquisition of Investment Technology Group Inc., a strategy the trading company has heavily leaned on in past integrations.

With 483 employees, the New York-based trading company has become known for a stripped-down corporate structure that relies on high-speed technology to facilitate its role as a leading market maker around the world. Now, Virtu is looking to deploy that same philosophy to ITG once its acquisition of the company is completed, which is expected to occur in the first half of the year.

Virtu's ability to cut jobs after an acquisition is in large part due to the company's technology stack, which reaches across the entire trade process.

"When you have a catalyst, a technology, that can do that, it's going to mean by definition that you're going to need a lot less folks in operations," Virtu CEO Doug Cifu said Feb. 7 on a fourth-quarter 2018 earnings conference call. "We're going to pick the right and the best personnel regardless of where they came from."

"[ITG has] wonderful franchises, but they're very siloed, technologically," he said. "They started as twins, but evolved over the last 15 to 20 years to become 13 cousins that don't really speak very well to each other anymore. At Virtu, that's just not a state or condition that we tolerate."

Virtu has been looking in recent years to expand and diversify its business. Virtu purchased rival trading company KCG Holdings Inc. for $1.4 billion in 2017, building up its retail trading operation. Then, in November 2018, Virtu struck another billion-dollar purchase, this time for ITG, an agency brokerage expected to shift revenues at the combined company slightly away from market making and toward technology and execution.

Once completed, the ITG acquisition will likely be followed quickly by a series of cost-cutting moves that Virtu has used in past acquisitions. Virtu has slashed its headcount since the KCG acquisition by more than half to its current levels, including a 6% cut since November 2018, according to several investor presentations. The company also shuttered a number of global KCG offices.

ITG had about 880 employees in the second quarter of 2018, the company disclosed in a September 2018 presentation.