Citadel Securities has decided to be a little bit less secretive and “tell its own story”, albeit in a somewhat guarded way. Partly as a result of an incredible $7bn revenue year in 2021, and also because of the investment made by Sequoia and Paradigm which valued the firm at $22bn, CEO Peng Zhao has decided that “staying under the radar is no longer an option”. Staying quiet is indeed no longer an option, not after the Gamestop affair suddenly made them targets of a Congressional inquiry.
It’s also possible, though, that the decision to invite Bloomberg in for an interview might have been made because the temptation to humblebrag and flex was becoming impossible to resist. Halfway down the article, a spokesperson is quoted denying that the company “revels” in hiring talent from Goldman Sachs “or anywhere else”, immediately followed by an external industry analyst saying “they have won so profoundly”. If you get the chance to put a headline like that in front of a boss as intense as Ken Griffin, you take it.
And he is pretty intense. Although Peng Zhao doesn’t really give away much in terms of Citadel Securities’ current plans, priorities or internal culture, he makes up for it with Ken stories. Two years after being hired aged 23 to the quant team as a child maths prodigy with a statistics PhD, Zhao got a call to come and help build mortgage models. It was 2007. The mortgage models turned into a three-month exercise in which Ken Griffin camped out in his office, “looking over my shoulder, hovering over my keyboard, putting out statistical analysis, models and graphs”. To be honest, this sounds incredibly annoying; perhaps Citadel’s staff are driven to success for fear of something similar happening to them.
Nonetheless, Zhao's early and intense Ken exposure was clearly good for his career, and those mortgage models will doubtlessly have come in useful given the financial crisis around the corner. The real message of the interview, though, is that Ken Griffin is now looking over the whole of Wall Street’s office, in a metaphorical sense. Citadel Securities has 250 clients for its institutional equity options business, as it moves on from its dominance of retail market making. They’re also gaining share in interest rate swaps and Treasury bonds, and keeping an eye on the “very large percentage of the world’s asset classes that don’t trade electronically”.
It's not a given that Citadel Securities will come to dominate the sales & trading space. Rapid growth is a lot easier when you’re under the radar for both competitors and regulators, and that’s no longer the case for Citadel Securities. But the firm is likely to have a significant effect just by trying – as electronic trading pushes into new markets, it tends to destroy pricing and profitability, which is one of the reasons why investment banks have become significantly more dependent on block trading revenue. It’s worth keeping an eye on what Ken Griffin is up to if you plan to have a long career.
Elsewhere, there’s an old proverb about the kind of worker that blames their tools, but on the other hand, it would have been an absolute miracle if the switch to working from home hadn’t thrown up at least a few cases where people weren’t able to work properly. That’s what makes it so hard to be sure who’s in the right in the case of former Credit Agricole gold trader Samuel Yang, currently making its way through the London employment court.
Mr Yang claims that he wasn’t given clear guidance on how to manage risks from his home office, and that “Instead of my usual access to systems and screens and news streams and data streams and the ability to chat with team members sitting next to me, or to check market color with brokers over the direct lines, I relied heavily on what my colleagues in the office told me”. Credit Agricole for their part say that when the gold market went through a volatility spike early in the pandemic, he failed to escalate an episode that could have lost them $30m, and that’s why they sacked him. The case continues – there are also apparently whistleblower and racial discrimination elements which haven’t been spelled out yet – but as always, it’s unlikely that anyone will end up feeling like a winner. Mr Yang has been unable to find another trading job since being fired in July 2020.
Bank of America’s China country executive, Wang Wei, has set aggressive targets for sustainability-linked bond issuance, aiming to double their underwriting to $50bn of deals over the next two or three years. In the near term, they’re planning on hiring four more ESG specialists for the capital markets team, which would also be a doubling in size. (Bloomberg).
This list of “finance books for people who hate finance” is actually quite a good set of recommendations for people who have a love-hate relationship with the industry they work in. (Literary Hub)
This week is the Cheltenham Festival, so we congratulate Christopher Furness, who does private placements in the City of London all week, then returns to Yorkshire and changes his name to “Christy” to race horses. He’s having his best season yet as a jockey, and possibly also in private placements. (Horse and Hound)
Combining a couple of recent themes – “bankers leaving Hong Kong” and “European banks staffing up” – Apoorva Shah, the former head of Asian M&A for Nomura, is joining BNP Paribas in London. (Financial News)
Lauren Callaghan runs Spencer Stuart’s specialist ESG recruitment practice. She notes that labour is so scarce that they’re having to think out of the box, hiring climate scientists and letting them skill up on finance. She also says that the most desirable professionals are now only interested in leading names which take the field seriously; it’s getting harder to recruit people to “tick box” ESG operations. (Business Insider)
The Goldman 1MDB trial continues to deliver – Tim Leissner is taking a break from entertaining us with stories of ten years ago in Asia, but Stephen Flaherty has stepped up. After “working for British intelligence for 30 years”, the “legal advisor” took part in reviewing the involvement of Jho Low in the bond deals. He wasn’t impressed, and so is in a position to issue one of banking’s most emphatic I-told-you-so’s. (Bloomberg)
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