Jump Trading, a quiet leader in the HFT world

Public Filings

Some of its financial filings are public. In 2010, Jump reported net income of $268 million and operating revenues of $512 million for that year, according to documents filed with the U.S. Securities and Exchange Commission. Profit amounted to $316 million in 2008, according to another filing with the regulator. At the end of March 2014, it owned U.S. stocks valued at $239 million, according to data compiled by Bloomberg from an SEC filing.

Last year, Jump paid CME Group Inc., the world’s largest futures exchange, $83 million in trading fees while receiving about $17 million for market making activities, according to a separate SEC filing that doesn’t identify Jump by name.

In April, Jump sought to force Twitter Inc. to reveal who was posing as one of its employees posting tweets. After Bloomberg News in April revealed that Schneiderman subpoenaed Jump as part of an industry investigation, the trading firm erased most of its website.

‘Made Billions’

“From what I understand, they’ve made billions in profits,” said James Koutoulas, chief executive officer of Typhon Capital Management LLC in Chicago, who said he has friends with ties to Jump. After the controversy stirred by Michael Lewis’s book “Flash Boys,” which said the U.S. stock market is rigged, “the high-frequency trading guys are trying to avoid any type of publicity,” he said.

Neither DiSomma, 49, nor Gurinas, 46, responded to phone or e-mail requests for interviews, and Jump didn’t respond to messages sent to its “media inquiries” e-mail address. The firm declined to meet with Bloomberg News on an unscheduled visit by a reporter to their offices in April. Subsequent meetings with Jump’s chief operating officer, Matt Schrecengost, arranged by Tessa Wendling, the firm’s general counsel, were canceled. She didn’t return phone calls or e-mails seeking comment.

Innate Humility

Humility is innate in Gurinas, according to his mother.

“He doesn’t like stories about him, and so wouldn’t want any of his friends to talk about him,” Nola Gurinas said in a phone interview.

While some high-frequency firms were created by computer programmers, DiSomma and Gurinas were pit traders at the CME -- the guys who shout and wave their arms to get the best prices. They met in 1992, and, as financial markets started migrating to electronic trading, they saw the potential of using computers to take advantage of price discrepancies in different markets, a tactic called arbitrage.

In 1999, DiSomma and Gurinas left to start their own firm, Akamai Trading LLC, partnering with John Harada. William Shepard, a board member of CME Group since 1997, bought a stake while agreeing not to get involved in management, according to a former Jump employee. Harada left to co-start rival Allston Trading LLC, and DiSomma and Gurinas changed Akamai Trading’s name in 2001 to Jump, a nod to how traders attract attention to themselves on exchange floors.

CME Link

Shepard is the only CME Group director without a photo next to his biography on the exchange’s website. His links to Jump require the exchange to disclose any financial relationship between the two companies because of his status as a board member. CME Group didn’t name the firm he works for in the regulatory filing earlier this year that disclosed the payments between Jump and the exchange. Shepard didn’t return phone calls or e-mails seeking comment.

CME Group’s conflict of interest policy prohibits board members from voting on matters where they could stand to benefit, said Anita Liskey, a spokeswoman for the exchange. She declined to comment on Shepard or Jump.

Jump hired scientists, mathematicians and programmers to build complex algorithms for trading U.S. and European equities, futures, currencies and bonds at speeds measured in fractions of a second. Unlike other firms that lease microwave towers to shave milliseconds off the time it takes to send trade orders in the U.S. and Europe, Jump buys them through a subsidiary, including one tower in Belgium that was once used by the North Atlantic Treaty Organization.

 

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