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the money these hedge funds are making for themselves right marketers market makers so obviously over here guys the institutional investors are trading more and more investment banks are trading more and more and their counterparties such as the market makers are making a bank so according to Bloomberg one of the biggest Market making firms on the market Jane Street and C Securities I'm now for the Wall Street beat two of the largest market making firms in the US that's Citadel Securities and Jane Street on track for record Revenue halls and here with more is Bloomberg Finance reporter Katherine dty record after record really for these guys and they've made a lot of investments into new areas of trading what's helping them catch up most with the Big Wall Street Giants so number one thing volumes we saw the big US Banks when they reported their first half of the Year everyone was up for them it was 18% for Citadel and Jan Street we're seeing a significant jump from a year ago but I'll also say that last year was a pullback from the year prior so you see es and flows but overall across Wall Street there's just record uh volumes that we're hitting and it we will'll be looking to see if the second half of the year is continuing this momentum but from the looks of how we're starting today and and going into the rest of or to end 2024 it could be that they are notching another record compared to what would be 2022 which was their last records now by the way uh what we're talking about is the money these hedge funds are making for themselves right market makers market makers not the Hedge F or market makers but it so it so it's just the revenue that they're bringing in it's not that you know they're doing well in terms of portfolios they're not making any bets they're uh basically facilitating the trades for institutional and Retail investors that are looking to buy into Securities ETFs um for Citadel Securities they've recently entered into corporate bond trading um for Jane Street they had already been quite dominant in this space um and that's because they started out with their dominance in ETFs they extended into fixed income it was a natural expansion for them and of course their Citadel Securities which is the market maker and then you have Citadel the hedge fund which is making those big bets and it's interesting when you focus on Jane Street we talk about Citadel all the T time James Street seems more secretive uh but they did sell a 1.4 billion high yield Bond deal earlier this year and I feel like that offered an interesting Peak into maybe some of their financials which we haven't really seen before and it was interesting I mean how much of their business how big and important they are when it comes to the ETF industry in particular absolutely they are the Behemoth in that space But what's also interesting is because they've been so dominant in ETFs as I just mentioned they were able to naturally expand to other asset classes so they've become quite dominant in fixed income in corporate bond trading and portfolio trading within that space so it now it just will be the question of how do they continue this expansion is it Global expansion are they going to look at other asset classes or find fine tune what they're already Market making in and a fun fact Citadel Securities had a new executive from Goldman just start days ago Jim espacito so a lot of rumors out there about how soon they'll go public right I mean this is an interesting time but I guys this is just the surface what they actually mention is that these firms some cases you have a hedge fund on the side for example C they the market making business and C the hedge fund they try to illustrate that you know what the hedge fund is not doing anything they're not taking new positions they're not trading as much obviously they the whole company the whole holding is focusing only on the market making business because it's obviously risk- free they don't really have any risk exposure essentially they're trading as of the recent interview SC Griffin mention you know 30 40% of the every security that is trade on a daily basis over 500 million trades are happening every single trading session and they're executed through the market making business of Studio Securities it's very important remember the Bloomberg guy said doing good on your Market making business doesn't necessarily mean that you're doing good on your hedphone business and this is where a lot of people are saying and speculating and complaining that hey you know what this could be a potential conflict of interest if you're actually running 50% of the trades through your Market Market making business and you're having one of the most powerful hedge funds at the same time this is essentially a hedge on the market because if you're running the hedge fund is risk exposure you might get wrong you might lose tons of money over leverage yourself you might sell Securities that you still didn't buy back which is a topic for a complete different video but you can actually catch each of these potential wrong decisions or exposures with having a market making business and see how Bloomberg said you know we don't really know much about Jane Street we know so much about Citadel we know about who is running it who found it how they actually operate counterparties they currently have a new uh CEO operating coming from Goldman Sachs there's a structure change over there but the main idea is that the business is doing very very well because Traders are trading more and more why is that well there is plenty of events that bring much more volatility elections Federal Reserve Cuts you name it Wars geopolitical conditions bricks whatever right so all these events bring trading opportunities getting the volumes higher we're seeing more volatility while everyone is hooping on the trade but remember these guys majority of their profits are coming from institutional investors trading not individual investors trading K Griffin said that if individual investors are trading through some of the broker apps their orders are small and their group with other small orders for example 20 orders from this broker 50 orders from this broker that are using payment for order flow all these small orders are bundled together and they're sent to their Market making business where investment Banks who are using sto for example as a market maker are getting different execution probably they're getting different pricing probably they getting even different economy of scale and speed of execution as well we don't really know that's not the publicly disclosed information but it's very very important that how the hedge funds are sitting on the sidelines while they're focusing on the market making business is this the future are we going to see some of the most successful Market making businesses essentially further down the own closing the hedge fund and just allocating all the funds towards 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