DRW Trading Group
{{short description|Proprietary electronic trading firm}}
{{Infobox company
| name = DRW Holdings, LLC
| logo = DRW Holdings.png
| image = 540 West Madison Street.jpg
| image_caption = Headquarters at 540 West Madison
| type = Private
| founded = {{Start date and age|1992}}
| industry = Financial services
| founder = Don Wilson
| key_people =
| products = Proprietary trading
Algorithmic trading
High-frequency trading
| location = Chicago, Illinois, U.S.
| website = {{URL|https://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.{{Cite web |title=About Us |url=https://drw.com/about/ |access-date=2021-03-06 |website=DRW |language=en-us}} 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.{{Cite news |date=2017-11-21 |title=High-Speed Traders In Search of New Markets Jump Into Bitcoin |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2017-11-21/bitcoin-draws-high-speed-traders-seeking-markets-to-transform |access-date=2021-03-06}}
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).{{Cite news |date=2019-03-08 |title=The Gazillion-Dollar Standoff Over Two High-Frequency Trading Towers |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/features/2019-03-08/the-gazillion-dollar-standoff-over-two-high-frequency-trading-towers |access-date=2021-03-06}}
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.{{Cite news |last=Osipovich |first=Alexander |date=2016-11-30 |title=Trader Don Wilson Faces Potential Lifetime Ban as Trial Begins |language=en-US |work=Wall Street Journal |url=https://www.wsj.com/articles/trader-don-wilson-faces-potential-lifetime-ban-as-trial-begins-1480510800 |access-date=2021-03-06 |issn=0099-9660}} The case was dismissed in December 2018 after the court found no evidence of market manipulation by DRW.{{Cite news |last=Rubin |first=Alexander Osipovich and Gabriel T. |date=2018-12-03 |title=Judge Dismisses Market-Manipulation Case Against Don Wilson Jr., DRW |language=en-US |work=Wall Street Journal |url=https://www.wsj.com/articles/judge-dismisses-market-manipulation-case-against-don-wilson-jr-drw-1543858721 |access-date=2021-03-06 |issn=0099-9660}}
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.{{Cite news |last=Saphir |first=Emily Chasan, Ann |date=2010-04-15 |title=Firms reaped windfalls in Lehman auction: examiner |language=en |work=Reuters |url=https://www.reuters.com/article/us-lehman-examiner-idUSTRE63D57U20100415 |access-date=2021-03-06}} In 2015, DRW acquired proprietary trading firm Chopper Trading.{{Cite news |date=2017-07-13 |title=They're The World's Fastest Traders. Why Aren't They Thriving? |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2017-07-13/they-re-the-world-s-fastest-traders-why-aren-t-they-thriving |access-date=2021-03-06}} In August 2017, Reuters reported that DRW had acquired high-frequency trading firm RGM Advisors.{{Cite news |last=McCrank |first=John |date=2017-08-16 |title=DRW to buy RGM in latest deal among high-speed trading firms |language=en |work=Reuters |url=https://www.reuters.com/article/us-rgmadvisors-m-a-drwholdings-idUSKCN1AW2GO |access-date=2021-03-06}} Later, in November 2017, DRW established an energy trading group in Houston from Martin Energy Trading.{{Cite web |date=2017-11-02 |title=DRW to Hire Houston-Based Energy Trading Group |url=https://www.businesswire.com/news/home/20171102006139/en/DRW-to-Hire-Houston-Based-Energy-Trading-Group |access-date=2021-03-06 |website=www.businesswire.com |language=en}}
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.{{Cite news |date=2018-10-03 |title=Eris Exchange to Create Crypto Market Backed by DRW, Virtu |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2018-10-03/eris-exchange-to-create-crypto-market-backed-by-drw-virtu |access-date=2021-03-06}} Digital Asset Holdings, which is creating a "blockchain database", was spun out of a Bitcoin trading operation at DRW.{{Cite news |last=Popper |first=Nathaniel |date=2015-12-29 |title=Start-Up With Bitcoin in Its DNA Stumbles on Fund-Raising Trail (Published 2015) |language=en-US |work=The New York Times |url=https://www.nytimes.com/2015/12/29/business/dealbook/cash-call-for-a-new-technology.html |access-date=2021-03-06 |issn=0362-4331}}