Citadel Securities raked in a record $7.5 billion in 2022, capitalizing on last year’s volatility and raising its presence as one of the largest trading units in the US.
(Bloomberg) — Citadel Securities raked in a record $7.5 billion in 2022, capitalizing on last year’s volatility and raising its presence as one of the largest trading units in the US.
Revenue for the market-making arm of billionaire Ken Griffin’s Citadel empire jumped 7.1% from the previous year’s $7 billion, a spokesperson confirmed. Citadel Securities has posted 12 consecutive quarters of net trading revenue in excess of $1 billion, he said.
The results reflect Citadel Securities’ status as a giant in the industry, taking share from top banks and dominating the market-making business for stocks and options, particularly for retail investors. The firm has said it handles about 40% of all US retail trading volume and one in every four US equities trades. It also serves more than 1,600 institutional clients, including sovereign wealth funds and central banks, the spokesperson said.
The full-year results follow a record first half of 2022, which brought $4.2 billion in net trading revenue amid wild swings in markets including stocks, Treasuries and derivatives, Bloomberg reported. One of the world’s largest trading firms, Citadel Securities ramped up market-making outside the US and expanded in Treasuries and rate swaps including Tokyo.
Both equities and fixed income fueled the trading growth, according to a person familiar with the results, with the firm making more investments in technology and talent to support growing client demand. Citadel Securities trades in more than 35 countries and is responsible for executing over 20% of equity orders.
Recently the market making unit has been caught in the Securities and Exchange Commission’s sweeping changes to rules underpinning the US stock market. The plans unveiled in December could affect how firms including rival market maker Virtu Financial Inc. and brokerage firms like Robinhood Markets Inc. process retail trade orders, as well as market dynamics that industry executives say have allowed brokerages to stop charging their clients commissions.
More Gains
Griffin’s flagship hedge fund — operated separately by Citadel’s investment management business — also posted big gains last year, jumping 38% thanks to strong performance in everything from equities to commodities, according to a person familiar with the returns. The firm made money in each of its five core strategies, which also include fixed income and macro, quant and credit, according to a person familiar with the returns.
A spokesperson for Citadel’s hedge funds declined to comment. The gains at the hedge fund and securities business were earlier reported by the Wall Street Journal.
Last year’s returns followed a strong 2020 and 2021, when the hedge fund posted more than 20% in each of those years. Citadel managed $54.5 billion across its various funds as of Jan. 1. It returned about $8.5 billion in profits to investors at the end of the year.
Griffin, who had a net worth of $29 billion before last year’s results, founded the hedge fund Citadel in 1990. He later established Citadel Securities, the trading firm that serves asset managers, banks, broker-dealers, hedge funds, government agencies and public pension programs.
(Updates with context on proposed SEC rule changes in sixth paragraph)
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