(Bloomberg) -- Ken Griffin’s Citadel Securities raked in a record $4.2 billion in first-half net trading revenue, capitalizing on this year’s surge in market volatility and stepping up its competition with the biggest banks.
Revenue soared about 23% from last year’s first half, according to people with knowledge of the situation. Citadel Securities has posted 10 consecutive quarters of net trading revenue in excess of $1 billion, with eight of those surpassing $1.5 billion, the people said, asking not to be identified disclosing private information.
Volatility spurred by interest-rate hikes, surging inflation, recession fears and Russia’s invasion of Ukraine has benefited trading operations across Wall Street. The biggest US banks pulled in $29 billion in trading revenue during the second quarter, a 21% increase over the prior year. Leading the pack was JPMorgan Chase & Co., which reported a $7.8 billion haul from the business.
Citadel’s figures are being disclosed to investors as part of a $400 million incremental loan the closely held firm is seeking, which will be used to build trading capital and for general corporate purposes.
A representative of Citadel Securities, which has offices in New York, Chicago and Miami, declined to comment.
Griffin, who has a net worth of $29.3 billion, founded the hedge fund Citadel in 1990, which now has more than $50 billion in investment capital. He later established Citadel Securities, the trading firm that serves asset managers, banks, broker-dealers, hedge funds, government agencies and public pension programs.
The first-half trading haul reflects Citadel Securities’ status as a corporate behemoth in trading, 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.
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Citadel Securities brought in $2.6 billion of earnings before interest, taxes, depreciation and amortization for the first half of the year, a 30% jump from the prior year. Total assets stood at $95.3 billion as of the second quarter, the people said.
The firm reported $1.9 billion of net trading revenue during the second quarter of this year, up from around $1.3 billion from the same period a year earlier, the people said. The company’s earnings before interest, taxes, depreciation and amortization were around $1.1 billion, up from $712 million in the second quarter of 2021.
Rival market-maker Virtu Financial, which reports its financial results as a public company, also saw its earnings rise, with revenue up 10% to $604.7 million in the second quarter, compared with $549 million a year earlier.
Moody’s Investors Service rates the term loan being sought by Citadel Securities at Baa3. That reflects the firm’s “strong capital base, profitable track record during periods of varying market volatility, and solid risk management capabilities and culture,” the rating company wrote in a recent report.
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