NEW YORK (TheStreet) -- Citigroup (C) is shutting down its alternative stock trading venue LavaFlow, the bank said on Tuesday, at a time when regulatory scrutiny has increased around broker-run trading platforms, forcing banks to rethink the costs, Reuters reports.
"Following a recent review of the LavaFlow ECN, we have decided that our capital, resources and efforts would be better redeployed to other areas within Citi's Equities Division," Citigroup said, according to Reuters.
LavaFlow, an alternative trading system (ATS) that electronically matches buy and sell orders for listed stocks, is one of about 40 such venues competing for much of the same business as the 11 registered U.S. stock exchanges such as Nasdaq OMX Group (NDAQ) and the New York Stock Exchange, Reuters said.
Shares of Citigroup are up 1.93% to $54.38.
Separately, TheStreet Ratings team rates CITIGROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CITIGROUP INC (C) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- C's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 35.43% is the gross profit margin for CITIGROUP INC which we consider to be strong. Regardless of C's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, C's net profit margin of 12.38% is significantly lower than the industry average.
- CITIGROUP INC's earnings per share declined by 10.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CITIGROUP INC increased its bottom line by earning $4.25 versus $2.46 in the prior year. For the next year, the market is expecting a contraction of 21.1% in earnings ($3.36 versus $4.25).
- Net operating cash flow has significantly decreased to $6,287.00 million or 55.87% when compared to the same quarter last year. Despite a decrease in cash flow of 55.87%, CITIGROUP INC is in line with the industry average cash flow growth rate of -63.98%.
- You can view the full analysis from the report here: C Ratings Report