DRW Trading Group

Last updated
DRW Holdings, LLC
Company type Private
Industry Financial services
Founded1992;32 years ago (1992)
FounderDon Wilson
Headquarters Chicago, Illinois, U.S.
Products Proprietary trading
Algorithmic trading
High-frequency trading
Website drw.com

DRW Holdings, LLC, typically referred to as DRW, is a proprietary trading firm based in Chicago. The firm was founded in 1992 by Don Wilson, an options trader at the Chicago Mercantile Exchange, and was named after his initials: DRW. [1] The firm trades various financial instruments, including fixed income, options and derivatives, energy and agriculture, and cryptocurrency. DRW has offices in Amsterdam, Austin, Greenwich, Tel Aviv, Chicago, New York City, Houston, London, Montreal, and Singapore. DRW is one of the largest trading firms in the world. [2]

History

DRW was founded in 1992 by Don Wilson, an options trader at the Chicago Mercantile Exchange, and was named after his initials: DRW. The firm utilizes a variety of different strategies, including high-frequency trading, and was a notable subject in Michael Lewis's 2014 book Flash Boys , which describes how several trading firms compete with each other to purchase and establish infrastructure that allows trading advantages at the sub-nanosecond level (latency arbitrage). [3]

The firm has been the subject of at least one lawsuit by financial regulators. The Commodity Futures Trading Commission, or CFTC, sued Wilson in November 2013 for alleged market manipulation in interest-rate swap futures during 2010 and 2011. [4] The case was dismissed in December 2018 after the court found no evidence of market manipulation by DRW. [5]

DRW has engaged in the acquisition of several other trading firms and asset portfolios. In 2008, during the collapse of investment bank Lehman Brothers, DRW purchased Lehman's foreign exchange, interest-rate derivatives, and agricultural derivatives portfolios in a fire sale auction. [6] In 2015, DRW acquired proprietary trading firm Chopper Trading. [7] In August 2017, Reuters reported that DRW had acquired high-frequency trading firm RGM Advisors. [8] Later, in November 2017, DRW established an energy trading group in Houston from Martin Energy Trading. [9]

DRW has also been active in the cryptocurrency and blockchain space. In 2018, DRW backed Eris Exchange, a cryptocurrency market that allows trading various cryptocurrencies such as Bitcoin, Ethereum, and Bitcoin Cash. [10] Digital Asset Holdings, which is creating a "blockchain database", was spun out of a Bitcoin trading operation at DRW. [11]

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References

  1. ↑ "About Us". DRW. Retrieved 2021-03-06.
  2. ↑ "High-Speed Traders In Search of New Markets Jump Into Bitcoin". Bloomberg.com. 2017-11-21. Retrieved 2021-03-06.
  3. ↑ "The Gazillion-Dollar Standoff Over Two High-Frequency Trading Towers". Bloomberg.com. 2019-03-08. Retrieved 2021-03-06.
  4. ↑ Osipovich, Alexander (2016-11-30). "Trader Don Wilson Faces Potential Lifetime Ban as Trial Begins". Wall Street Journal. ISSN   0099-9660 . Retrieved 2021-03-06.
  5. ↑ Rubin, Alexander Osipovich and Gabriel T. (2018-12-03). "Judge Dismisses Market-Manipulation Case Against Don Wilson Jr., DRW". Wall Street Journal. ISSN   0099-9660 . Retrieved 2021-03-06.
  6. ↑ Saphir, Emily Chasan, Ann (2010-04-15). "Firms reaped windfalls in Lehman auction: examiner". Reuters. Retrieved 2021-03-06.{{cite news}}: CS1 maint: multiple names: authors list (link)
  7. ↑ "They're The World's Fastest Traders. Why Aren't They Thriving?". Bloomberg.com. 2017-07-13. Retrieved 2021-03-06.
  8. ↑ McCrank, John (2017-08-16). "DRW to buy RGM in latest deal among high-speed trading firms". Reuters. Retrieved 2021-03-06.
  9. ↑ "DRW to Hire Houston-Based Energy Trading Group". www.businesswire.com. 2017-11-02. Retrieved 2021-03-06.
  10. ↑ "Eris Exchange to Create Crypto Market Backed by DRW, Virtu". Bloomberg.com. 2018-10-03. Retrieved 2021-03-06.
  11. ↑ Popper, Nathaniel (2015-12-29). "Start-Up With Bitcoin in Its DNA Stumbles on Fund-Raising Trail (Published 2015)". The New York Times. ISSN   0362-4331 . Retrieved 2021-03-06.
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