(Bloomberg) — Citadel Securities and Jane Street Group LLC, two of the largest market-making firms in the U.S., are on track for record revenues as they move further into the trading territory of the big banks.
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At Citadel Securities, net trading revenue rose 81 percent to $4.9 billion in the first half from a year earlier, while at Jane Street it rose 78 percent to $8.4 billion, according to people familiar with the matter. Both figures are well above the pace needed to reach an all-time high in annual revenue.
The results provide a rare insight into the activities of owner-managed companies that have invested in technology and talent to steadily expand their market-making capabilities in equity and fixed income trading worldwide.
Jane Street dominates the exchange-traded fund space and is now expanding into credit trading. Citadel Securities recently entered corporate bond trading, starting with investment grade bonds, and has also begun electronic trading of interest rate swaps on euros and sterling.
Jane Street said in an update to investors last week that recent growth was due to continued high equity and options volumes as well as strong inflows into exchange-traded funds.
The company sold a $1.4 billion high-yield bond earlier this year to bolster its balance sheet and allow for further investment in the business, said the people, who asked not to be identified discussing nonpublic information.
Ken Griffin’s Citadel Securities posted adjusted profit of $2.7 billion in the first half, compared with $1.1 billion a year earlier, the people said. The second quarter contributed $2.6 billion in net trading revenue and $1.4 billion in adjusted profit, it said.
Jane Street’s adjusted profit for the first half of the year was about $6.1 billion, almost double the year-ago figure of $3.1 billion. About $2.9 billion of this year’s total profit came from the second quarter, when the company posted net trading revenue of $4 billion.
A representative for Citadel Securities declined to comment and Jane Street did not immediately comment.
These figures are just some of many financial metrics that were recently disclosed to the two companies’ lenders.
By comparison, Wall Street’s largest banks reported an overall increase in equity trading revenue of 18 percent in their second-quarter results, more than three times the increase expected by analysts.
Citadel Securities ended the quarter with approximately $3.9 billion in unrestricted cash and $15.3 billion in net trading capital. Jane Street had approximately $5.7 billion in cash on its balance sheet.
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