Citadel Securities

Last updated
Citadel Securities LLC
Company type Private
Industry Financial services
Founded2002;23 years ago (2002)
Founder Kenneth C. Griffin
Headquarters Southeast Financial Center, Miami, Florida, U.S.
Area served
Worldwide
Key people
  • Peng Zhao (CEO)
  • Kenneth Griffin (chairman)
  • Jim Esposito (president)
RevenueIncrease2.svgUS$9.7 billion (2024)
Increase2.svgUS$4.2 billion (2024)
Number of employees
1,600 (2023)
Parent Citadel Enterprise Americas LLC
Website citadelsecurities.com
Footnotes /references
[1] [2]

Citadel Securities LLC is an American market making firm headquartered in Miami, Florida. It provides liquidity and trade execution to retail and institutional clients. [3] [4] [5] The firm also trades futures, equities, credit, options, currencies, and Treasury bonds. It is the largest designated market maker on the New York Stock Exchange. [6] [7]

Contents

Citadel Securities is a separate entity from the hedge fund Citadel LLC, although both were founded and are majority owned by American hedge fund manager Kenneth C. Griffin. [8] Citadel Securities moved its headquarters from Chicago to Miami in 2022 [9] [10] with plans to build a new headquarters on Brickell Bay Drive. [11] [12] Peng Zhao, who joined the company in 2006, has been the CEO since 2017. [13]

History

2000–2010

Citadel Securities was formed in 2002 [14] [15] [16] as a market maker, providing liquidity and trade execution to retail and institutional clients. [17] By August 2011, the company ended its foray into investment banking to instead focus on electronic trading and market making. [18]

2011–2019

In 2014, the firm expanded its market-making offering to interest rate swaps. [19] The company was also exempted from that year's Regulation Systems Compliance and Integrity (Reg SCI) act, a decision that was criticized by U.S. financial market analysts[ who? ]. Both Citadel and the SEC declined to comment. [20]

In August 2014, Citadel was fined $800,000 ($1.06 million in 2024) for irregularities in its trading practices between March 18, 2010, and January 8, 2013. [21] Over a two-year period until September 2014,[ contradictory ] hundreds of thousands of OTC orders were removed from the firm's automated trading processes, requiring them to be handled manually by human traders. Citadel Securities then "traded for its own account on the same side of the market at prices that would have satisfied the orders," without immediately filling the orders at the same or better prices as required by FINRA rules. [22]

By 2015 Citadel Securities had replaced Wall Street banks[ which? ] as the world's largest interest-rate-swap trader by number of transactions. [23] In 2016, the company opened a new office in Sydney, Australia. [24]

In January 2017, the SEC fined Citadel $22.6 million ($29 million in 2024) for misleading clients regarding the way it priced trades. The SEC found that despite Citadel claiming it would provide or try to provide the best prices for retail orders routed by other broker-dealers, two of its algorithms did not internalize retail orders at the best price observed nor sought to obtain the best price in the marketplace. Citadel did not admit or deny these findings. [25] The SEC fined Citadel again in December 2018, this time $3.5 million ($4.38 million in 2024) for incorrectly reporting nearly 80 million trades from 2012 to 2016, and also "willfully violat[ing] the broker-dealer books and records and reporting provisions." Citadel admitted to these findings. [26] [27]

In October 2018, Bloomberg reported that 40% of Robinhood's revenue came from selling customer orders to firms such as Citadel Securities and Two Sigma Securities. [28]

2020–present

2020

During the first half of 2020, Citadel Securities doubled its profit while generating $4 billion ($4.86 billion in 2024) in revenue due to increased volatility and retail trading caused by the coronavirus pandemic. [29] In October 2020, Citadel Securities announced it would acquire IMC's NYSE market making unit, [30] [31] [32] making Citadel the largest designated market maker on the NYSE. [6] [7] Citadel Securities also began selling US Treasury and dollar interest rate swap products in Hong Kong in 2020. [33]

Citadel Securities was censured by U.S. regulators 7 times and fined a total of slightly less than 1 million ($1.21 million in 2024) in 2020. This was done in response to a variety of conduct, including failing to close failure to deliver positions, naked short selling, inaccurate reporting of short sale indicators, executing trades during circuit-breaker halts, and failing to offer its clients best prices on the bid-ask spread. [34] The firm also paid a 670 million-yuan ($97 million ($118 million in 2024)) settlement to Chinese regulators for trading irregularities dating from 2015. [35]

In October 2020, Citadel Securities filed a lawsuit against the Securities and Exchange Commission over the its decision to approve a new order type for IEX. [36] [37] The D.C. Court of Appeals ruled on the SEC's behalf two years later. [38]

2021

Between February and May, House of Representatives member Maxine Waters, [39] SEC chairman Gary Gensler, [40] and Senator Elizabeth Warren [41] separately addressed how Citadel Securities' dominant market position could pose a potential future threat to the US financial system. Warren raised further concern regarding Griffin's potential conflicts of interest. [42] Congressional hearings further criticized Citadel's payment-for-order-flow arrangements, and their relationship with Ben Bernanke and Janet Yellen [43] as well as its practice of hiring officials from agencies that regulate it, including the SEC [44] and CFTC. [45]

Separately, in March, Citadel Securities agreed to a censure by FINRA and a $275,000 ($319,105 in 2024) fine for improperly reporting nearly 500,000 Treasury transactions between 2017-2019. [46] [47]

An investors' suit filed later that year claimed Citadel conspired with Robinhood to block trading of certain “meme stocks” during the GameStop short squeeze in January. The meme stocks had been popularized in online discussion forums and according to investors, their rise in price threatened losses to Citadel from its short positions. The suit was dismissed by the District Court in 2022 and the dismissal was upheld by the Eleventh Circuit in 2024. The Circuit Court said that the complaint as filed did not claim that the markets suffered anticompetitive effects from the supposed collusion. [48]

2022–2024

As of January 2022, the firm oversaw more than 2,000 listed securities. [49] In August 2022, the firm opened an office in Tokyo and announced plans to launch US fixed income offerings there. [50] By the end of 2022 Citadel Securities traded in over 35 countries, executed more than 20 percent of all US equity trades and also traded futures, options, currencies and Treasury bonds. [51] The firm ended the year with $7.5 billion ($8.06 billion in 2024) in revenue, which topped the company's previous record set the year prior. [52]

As of February 2023, the Hong Kong based subsidiary of Citadel Securities was designated as a Qualified Foreign Institutional Investor (QFII) by the Chinese government, giving the company more access to mainland China's bond and stock markets. [53] In June 2023, Citadel Securities became active in corporate debt trading and introduced investment-grade trading to clients. [54]

In September 2023, the SEC initiated legal action against Citadel Securities, citing violations of Regulation SHO. The SEC found that, between 2015 and 2020, Citadel Securities mismarked millions of sell orders due to a coding error in their automated trading system, obstructing regulatory oversight. The firm agreed to a cease and desist order imposing a censure, a $7 million ($7.22 million in 2024) fine, and additional undertakings without admitting or denying the findings. [55] [56]

In June 2024, Citadel Securities began trading Euro and Sterling interest-rate swaps. The firm grew its existing global rates team to support the expansion and also named Paris as its trading hub for European rates. [57] In September 2024, Citadel Securities hired Jim Esposito, former co-head of global banking and markets at Goldman Sachs, as president. [58]

Performance

In 2012, Citadel Securities was noted for providing reliable trading at lower costs and with tighter spreads. [59] In 2015, Barron's ranked Citadel Securities #1 in providing price improvement for investors in both S&P 500 and non-S&P shares. [60] According to the Wall Street Journal , about one-third of stock orders from individual investors in 2015 was completed through Citadel, which accounts for about 10 percent of the firm's revenue. [61]

Partnerships

In 2009, Citadel Investment Group and the Chicago Mercantile Exchange partnered to create a credit default swaps electronic-trading platform. [62]

In January 2022, Citadel Securities announced that venture capital firm Sequoia Capital and cryptocurrency investor Paradigm Operations had made a $1.15 billion ($1.24 billion in 2024) investment in the firm. The transaction valued Citadel Securities at approximately $22 billion ($23.6 billion in 2024). [63] [64]

Citadel Securities has partnered with other financial firms to launch several exchanges, including the Members Exchange (MEMX), [65] [66] the planned Texas Stock Exchange (TXSE), [67] the crypto exchange EDX Markets (EDXM), [68] and the FMX Futures Exchange. [69]

References

  1. ↑ Doherty, Katherine (11 May 2023). "Ken Griffin's Hand-Picked Math Prodigy Runs Market-Making Empire" . Bloomberg Businessweek . Archived from the original on 13 May 2023.
  2. ↑ Arroyo, Carmen; Doherty, Katherine (March 6, 2025). "Citadel Securities' $9.7 Billion Trading Revenue Passes Barclays" . Bloomberg News.
  3. ↑ Gordon, Amanda; Tan, Gillian; Maloney, Tom (28 June 2022). "Griffin's Citadel Seen Behind Record $363 Million Miami Land Purchase". www.bloomberg.com. Retrieved 28 July 2022.
  4. ↑ "About Citadel Securities". Citadel Securities. Retrieved 23 August 2022. Miami Global Headquarters Southeast Financial Center 200 S. Biscayne Blvd. Miami, FL 33131
  5. ↑ Salzman, Avi. "Citadel Securities Could Become a Crypto Player". www.barrons.com.
  6. 1 2 "Citadel Securities to buy NYSE market-making unit from IMC". Pensions & Investments. 2020-10-09.
  7. 1 2 "Citadel Securities to buy rival IMC's NYSE market making business". Reuters. 2020-10-08.
  8. ↑ Phillips, Matt; Kelly, Kate (2021-02-18). "A Shadowy but Powerful Wall St. Firm Has Its Moment in Washington". The New York Times. ISSN   0362-4331 . Retrieved 2022-05-05.
  9. ↑ Darbyshire, Madison. "'The Citadel migration' shaking up Miami's luxury property market". Financial Times.
  10. ↑ Fabbro, Rocio (19 September 2023). "Crime and Taxes Could Drive a Trillion-Dollar Industry Out of Chicago". The Messenger. Archived from the original on October 11, 2023.
  11. ↑ "Citadel, Sterling Bay part ways on planned waterfront Miami tower". The Real Deal. 10 April 2023.
  12. ↑ Dinkova, Lidia (26 December 2023). "Here are South Florida's biggest office leases of 2023". The Real Deal.
  13. ↑ Marek, Lynne (30 January 2017). "For its next CEO, Citadel Securities turns to a veteran". Crain's Chicago Business.
  14. ↑ Bullock, Nicole (2017-04-04). "Citadel Securities hires ex-SEC official as general counsel". Financial Times.
  15. ↑ "Citadel 'May Pose a Systemic Threat,' Waters Says". WSJ.
  16. ↑ "Citadel's Griffin details firm's role in trading during GameStop rally". Reuters. 2021-02-18.
  17. ↑ Marek, Lynne (6 November 2010). "Citadel gets slow start in i-banking" . Crain Communications . ISSN   1557-7902. Archived from the original on December 14, 2019.
  18. ↑ McCrum, Dan (August 11, 2011). "Citadel abandons plan to rival banks". Financial Times. Archived from the original on January 27, 2020. Retrieved January 27, 2020.
  19. ↑ Albanese, Chiara (6 June 2014). "Citadel to Offer Trading in Interest-Rate Swaps" . The Wall Street Journal. Eastern Edition. No. Markets. United States: Wall Street Journal. Dow Jones & Company Inc. ISSN   0099-9660. Archived from the original on January 10, 2018. Retrieved 27 July 2015.
  20. ↑ Morgenson, Gretchen (2017-09-22). "S.E.C. Rules to Protect Investors From Cyberthreats Fall Short". The New York Times. ISSN   0362-4331 . Retrieved 2021-03-26.
  21. ↑ McCrank, John (2014-08-05). "Citadel fined $800,000 by U.S. regulators for trading violations". Reuters. Retrieved 2021-02-20.
  22. ↑ Henderson, Richard (July 20, 2020). "US regulator fines Citadel Securities over trading breach". Financial Times. Archived from the original on December 20, 2020. Retrieved January 28, 2021.
  23. ↑ Zuckerman, Gregory; Cherney, Mike (2 December 2015). "Wall Street Goes Short on Bond Traders" . The Wall Street Journal. Eastern Edition. No. MARKETS. United States: Wall Street Journal. Dow Jones & Company Inc. ISSN   0099-9660. Archived from the original on December 17, 2019. Retrieved 17 December 2019.
  24. ↑ Yilun Chen, Lulu (1 December 2023). "Citadel Picks Less Than 0.3% of Applicants for Sydney Internship". Bloomberg.
  25. ↑ "SEC.gov | Citadel Securities Paying $22 Million for Misleading Clients About Pricing Trades". www.sec.gov. Retrieved 2021-02-20.
  26. ↑ "Three Broker-Dealers to Pay More Than $6 Million in Penalties for Providing Deficient Blue Sheet Data". Security and Exchange Commission. December 10, 2018.
  27. ↑ "Citadel Securities Among Firms Fined Over Trading Data Errors". Bloomberg.com. 2018-12-10. Retrieved 2022-09-02.
  28. ↑ "Robinhood Gets Almost Half Its Revenue in Controversial Bargain With High-Speed Traders". Bloomberg.com. October 15, 2018. Archived from the original on January 19, 2019. Retrieved January 28, 2021.
  29. ↑ Maloney, Tom; Bakewell, Sally (September 25, 2020). "Citadel Securities Doubled Profit as Dominance Grew in 2020". Bloomberg News . Archived from the original on October 7, 2020. Retrieved October 3, 2020.
  30. ↑ Osipovich, Alexander (2020-10-08). "WSJ News Exclusive | Citadel Securities to Buy NYSE Market-Making Unit of Smaller Rival IMC". Wall Street Journal. ISSN   0099-9660. Archived from the original on October 9, 2020. Retrieved 2020-10-09.
  31. ↑ "Citadel Securities to buy NYSE market-making unit from IMC". Pensions & Investments. 2020-10-09. Archived from the original on October 12, 2020. Retrieved 2020-10-09.
  32. ↑ Osipovich, Alexander (8 October 2020). "Citadel Securities to buy NYSE market-making unit of rival IMC Financial Markets". MarketWatch. Archived from the original on October 9, 2020. Retrieved 2020-10-09.
  33. ↑ "Citadel Securities Ramps Up China Presence When Others Cut Costs". Bloomberg.com. 2023-03-22. Retrieved 2024-02-10.
  34. ↑ "FINRA BrokerCheck Report Citadel Securities LLC" (PDF).
  35. ↑ "Citadel Securities Agrees to $97 Million Settlement in China". Bloomberg.com. 2020-01-20. Retrieved 2021-02-20.
  36. ↑ Osipovich, Alexander (2020-10-17). "Citadel Securities Sues SEC for Approving New Stock-Order Type". Wall Street Journal. ISSN   0099-9660. Archived from the original on October 22, 2020. Retrieved 2020-10-22.
  37. ↑ "Citadel Securities sues SEC". Crain's Chicago Business. 2020-10-17. Archived from the original on October 22, 2020. Retrieved 2020-10-22.
  38. ↑ "Citadel Securities LLC v. SEC, No. 20-1424 (D.C. Cir. 2022)". United States Court of Appeals for the District of Columbia Circuit. July 29, 2022 – via Justia.
  39. ↑ "Citadel 'May Pose a Systemic Threat,' Waters Says - WSJ.com". WSJ. Retrieved 2021-03-24.
  40. ↑ Platt & Silverman, Eric & Gary (May 5, 2021). "Gensler raises concern about market influence of Citadel Securities". Financial Times.
  41. ↑ Phillips, Matt (2021-03-17). "Congress hears testimony again on GameStop, focusing on the financial plumbing behind the frenzy". The New York Times. ISSN   0362-4331 . Retrieved 2021-03-24.
  42. ↑ Fitzgerald, Maggie (2021-02-18). "Warren presses Citadel CEO Griffin about relationship with Robinhood, payment for order flow". CNBC. Retrieved 2021-03-14.
  43. ↑ Aliaj, Ortenca; Wigglesworth, Robin; Fletcher, Laurence (7 April 2021). "How Ken Griffin rebuilt Citadel's ramparts". Financial Times . Retrieved 2021-04-10.
  44. ↑ "Citadel's Ken Griffin Adds to Hires From a Preferred Locale: the SEC". Bloomberg.com. 2018-03-16. Retrieved 2021-04-10.
  45. ↑ Rennison, Joe (April 2021). "Ex-CFTC chair joins Citadel Securities 27 days after leaving regulator". Financial Times . Retrieved 2021-04-10.
  46. ↑ "FINRA fines Citadel Securities for multiple issues with transaction reporting". FX News Group. 2021-03-26. Retrieved 2021-03-27.
  47. ↑ "FINANCIAL INDUSTRY REGULATORY AUTHORITY LETTER OF ACCEPTANCE, WAIVER, AND CONSENT NO. 2019061038301" (PDF).
  48. ↑ Lindsey, Ayana (11 July 2024). "Game Stopped: Eleventh Circuit Affirms Dismissal of Meme Stock Antitrust Lawsuit". Covington. Retrieved 30 August 2025.
  49. ↑ Doherty, Katherine (11 January 2022). "Griffin Sets Citadel Securities on IPO Path With Tech Backers" . Bloomberg News . Archived from the original on 11 January 2022.
  50. ↑ "Citadel Securities continues global expansion with new Tokyo office - The TRADE". www.thetradenews.com. 31 August 2022. Retrieved 2022-09-02.
  51. ↑ Osipovich, Juliet Chung and Alexander. "WSJ News Exclusive | Citadel Posts Record Revenues for Hedge-Fund, Securities Operations". WSJ. Retrieved 2024-02-10.
  52. ↑ "Reuters". 5 January 2023.
  53. ↑ "Citadel Securities Wins Wider Access to Chinese Stock and Bond Markets". WSJ. Retrieved 2024-02-10.
  54. ↑ "Citadel Securities Is Muscling Its Way Into Credit Trading". Bloomberg.com. 2023-06-29. Retrieved 2024-02-10.
  55. ↑ Cox, Chelsey (September 22, 2023). "SEC slaps Citadel Securities LLC with $7 million fine to settle short selling regulations charges". CNBC.
  56. ↑ "SEC.gov | SEC Charges Citadel Securities for Violating Order Marking Requirements of Short Sale Regulations". www.sec.gov. Retrieved 2023-09-23.
  57. ↑ Atkins, Alice; Gupta, Kriti (11 June 2024). "Citadel Securities Kicks Off Trading in European Rates Markets". Bloomberg.
  58. ↑ Doherty, Katherine (30 May 2024). "Citadel Securities Taps Goldman's Esposito as New President". Bloomberg News.
  59. ↑ Marek, Lynne (13 October 2012). "Citadel's big move into the markets" . Crains Chicago Business. Chicago, IL, United States: Crain's Chicago Business. Crain Communications, Inc. ISSN   1557-7902. Archived from the original on December 14, 2019. Retrieved 11 December 2014.
  60. ↑ Alpert, Bill. "Exclusive: Who Makes Money on Your Stock Trades". www.barrons.com.
  61. ↑ Copeland, Rob (2015-08-04). "Citadel's Ken Griffin Leaves 2008 Tumble Far Behind". Wall Street Journal. ISSN   0099-9660.
  62. ↑ Lynch, Sarah; Ng, Serena (14 May 2009). "U.S. Moves to Regulate Derivatives Trade" . The Wall Street Journal . United States. Dow Jones & Company Inc. ISSN   0099-9660. Archived from the original on December 18, 2019. Retrieved 17 December 2019.
  63. ↑ Lombardo, Cara; Osipovich, Alexander (11 January 2022). "Citadel Securities to Receive First Outside Investment". The Wall Street Journal.
  64. ↑ Ross Sorkin, Andrew; de la Merced, Michael J. (11 January 2022). "Citadel Securities, a top trading firm, sells a stake to Silicon Valley investors". The New York Times .
  65. ↑ Osipovich, Alexander (7 January 2019). "Wall Street Firms Plan New Exchange to Challenge NYSE, Nasdaq" . The Wall Street Journal.
  66. ↑ Wanna, Carly; Doherty, Katherine (27 September 2023). "Wall Street-Backed Options Exchange Kicks Off Amid Peak Volumes" . Bloomberg News.
  67. ↑ Driebusch, Corrie (4 June 2024). "New Texas Stock Exchange Takes Aim at New York's Dominance" . The Wall Street Journal.
  68. ↑ Doherty, Katherine; Yang, Yuegi (20 June 2023). "Crypto Exchange Backed by Citadel Securities, Fidelity Goes Live" . Bloomberg News.
  69. ↑ Chan, Jeremy. "JPMorgan, Citadel, Goldman join BGC-led exchange in match-up against CME". Financial News London.
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