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NEWSLETTERS & ALERTS
Is Ken Griffin Trying to Make Citadel the 'Amazon of Wall Street'?
By Howard Haykin
On Friday, it was reported that Citadel Securities hired away Joe Mecane from Barclays to run Citadel’s equity, options and ETF businesses – starting in September. He replaces Jamil Nazarali, who became special advisor to CEO Peng Zhao last month. [See MarketsInsider] Joe Mecane’s a well-established talent, with excellent credentials:
- Barclays, 2014-2017: Last position - Managing Director, Global Head of Electronics Equities Product
- NYSE Euronext, 2008-2014: Last position - EVP, Co-Head U.S. Cash & Listings
- UBS Investment Bank, 2004-2008: Last position – MD, Head of Equities Intermediaries Business
- Knight Capital Group, 1998-2003: Last position - COO
- Price Waterhouse, 1994-1998: Last position – Manager
- UofP Wharton School, 1994: MBA
With all due respect to Mr. Mecane, what really grabbed my attention in this story were some significant developments that point to the rapid rise of Citadel Securities within the securities industry, namely:
- Citadel Securities executes about 37% of all U.S.-listed retail volume; and,
- Citadel Securities has made a slew of high-profile hirings in the past year, including former top SEC officials Steve Luparello (as General Counsel) and Gregg Berman.
- Citadel Securities hired Microsoft executive Kevin Turner last year, but he resigned in January when it was apparent he wasn’t a good fit.
Researching further into Citadel Securities, we learn that the firm trades stocks, bonds, options and currencies in markets around the world, and that its execution dominance in the U.S. retail equities markets is largely driven by a strategy to pay online brokerages such as Charles Schwab and TD Ameritrade to execute their customer’s orders and trade against them. We also learn that, in September 2016, Bloomberg ran a story about Citadel muscling into credit derivatives. In just several months, Bloomberg reports, Citadel had managed to capture 11.5% of U.S. swaps index trading. [See Bloomberg]
KENNETH GRIFFIN. Behind these and other developments at Citadel Securities is Ken Griffin, founder and chief executive of Citadel LLC, the global investment firm. According to Wikipedia:
Mr. Griffin, 49, is an American investor, hedge fund manager, and philanthropist. He founded hedge fund manager, Citadel, LLC, in 1990 with $4.6 million. By 1998, Citadel had grown to a team of more than 100 employees and $1 billion in investment capital. By March 2015, the company had become one of the world's largest alternative investment management firms with an estimated $25 billion in investment capital. Citadel's group of hedge funds rank among the largest and most successful hedge funds in the world. Forbes identified Griffin as one of 2012's highest earning hedge fund managers as well as one of the Forbes 400.
As of February 2016, Ken Griffin’s estimated net worth was $7.3 billion. In early 2014, Griffin made a $150 million donation to Harvard University, his alma mater – then the largest single donation ever made to the institution; his donations to various organizations and causes have totaled about $500 million.
So, perhaps it’s an exaggeration on my part, but all of this leads one to suspect that Ken Griffin is hell-bent on creating the most dominant non-bank financial institution in the world. Which, unsurprisingly, evokes comparison with Jeff Bezos and Amazon, the most dominant retail force in the world.