High-Frequency Firm Allston Cuts Employees Amid Low Volatility

(Bloomberg) — High-frequency trading firm Allston Trading pared its workforce late last week as it struggles to make money in some parts of its business.

“We made the difficult but necessary decision to reduce staff working in unprofitable areas of the firm,” Tom Becker, an outside spokesman for the firm, said in an emailed statement. He declined to discuss the number of jobs cut or teams affected, but said the company has about 100 employees. As many as 25 workers were cut, a mix of traders and support staff, said a person with knowledge of the matter.

The reduction follows the decision by another Chicago-based high-speed firm, XR Trading, to let about 10% of its staff go late last year. Low volatility has made for a tough environment for many high-frequency traders, as they rely on price movements to allow them to buy and sell futures and other assets throughout the day.

Allston, founded by futures traders Bob Jordan, Elrick Williams (NYSE:) and John Harada, uses its own money rather than customer funds, and is active in futures, cash currencies, commodities and fixed-income assets, according to records maintained by the Financial Industry Regulatory Authority.

While closely held Allston keeps a low profile, it has made headlines in recent years. Chopper Trading sued Allston last year, saying it engaged in spoofing in U.S. Treasury futures markets, a type of manipulation that involves entering fake orders to move prices. Chopper alleged that Allston engaged in spoofing from 2012 to 2015. In May, Allston filed a motion asking the court to compel arbitration and, should that not be granted, to dismiss the suit because it said Chopper had missed the window of opportunity to file a claim. The case is ongoing.

The U.S. Commodity Futures Trading Commission, in 2015, began an investigation into Allston for alleged market manipulation, a person familiar with the matter said at the time. The regulator subpoenaed CME Group Inc. (NASDAQ:) for information related to Allston, the person said. Through an arbitration process at CME, Allston was accused by a rival the year before of misleading competitors through spoofing. Allston said then it had done nothing wrong.

Becker declined to comment on the CFTC investigation.

“Our decision to focus the firm’s technology resources in more promising areas of our business is unrelated to any regulatory or compliance considerations,” Becker said in the statement.

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