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Specialist Liquidity Provider of the Year

Citadel Securities

Most liquidity providers tend to specialise in a particular asset class, but Citadel Securities can be credited for demonstrating success and leadership across interest rate derivatives, equities and foreign exchange. The firm’s swaps business is still relatively new, launched in November 2014, but it is already competing with the largest investment banks. Citadel now covers roughly 300 institutional investor clients and was the first non-bank to become a self-clearing member of LCH.Clearnet in 2015. In equities, Citadel executes around 36% of all US-listed shares traded on behalf of retail investors, while in FX, the firm holds client positions for an average of minutes rather than seconds and delivers competitive pricing on a 24-hour basis. During the volatility in foreign exchange markets on June 24, following the UK referendum on its membership of the European Union, Citadel was one of the leading non-bank liquidity providers, trading 4.5 times its average daily volume for the year pre-Brexit.

Jump Trading

On June 24, 2016, as the result of the UK’s referendum on membership of the European Union was announced and the value of sterling plummeted, Chicago-based Jump Trading emerged as one of the leading providers of FX liquidity as some banks temporarily stepped back from pricing. Jump was the most significant player on the FastMatch platform, which traded triple its usual volume that day, and is regularly among the top three price makers on other major platforms. Privately owned and managed by trading professionals, Jump Trading has offices in Chicago, New York, London and Singapore and employs a diverse workforce ranging from traders and technologists to academics and post-trade experts. Recent hires include Mark Bruce, formerly head of product at EBS BrokerTec, who joined as head of business development for FICC, and Dave Olsen, formerly global head of clearing at JP Morgan, who joined as head of post-trade strategy.

Lucid Markets

Non-bank liquidity provision has gained momentum in recent years, but the concept itself is not new, and Lucid Markets deserves kudos for being a first mover. Founded in 2009 by Dierk Reuter, formerly head of FX algorithmic trading at Deutsche Bank, and his opposite number at Goldman Sachs, Matthew Wilhelm, Lucid Markets has remained a leading player in the past seven years as other firms have joined the fray. Today, it makes prices in spot FX to retail brokers, banks, hedge funds and asset managers globally and prides itself on its ability to hold risk for clients, boasting tight spreads and minimal market impact. Headquartered in London, it has offices in New York and Chicago, with Asian clients serviced from California. In 2012, US retail giant FXCM purchased a 50% stake in Lucid Markets for $176 million in an effort to bolster its institutional offering, but Lucid has retained its niche, low-key identity, relying on word-of-mouth rather than aggressive marketing to win business.

Virtu Financial

As the only major non-bank liquidity provider to be publicly listed – it began trading on Nasdaq in April 2015 – Virtu Financial faces greater transparency requirements than its competitors, which in turn allows for much greater scrutiny of its business. Active across equities, foreign exchange, commodities, options and fixed income, Virtu’s business model is predicated on avoiding risky directional positions, but it makes prices on more than 230 exchanges and liquidity pools in 35 countries. The firm reported a net income of $39.3 million for the second quarter of 2016, down from $51.4 million in the first quarter – a fall it attributed to low volumes and volatility across global markets. In spite of challenging market conditions and the obligations that come with a public listing, Virtu is clearly committed to moving its business forward. Most recently, it announced a three-year partnership with JP Morgan, whereby Virtu will provide the technology to the US bank to trade dealer-to-dealer markets in US treasuries.

XTX Markets

In a list of ‘firms to watch’ in the forex market in 2016, XTX Markets would surely rank near the top. Formerly a highly successful market-making team within GSA Capital, led by respected quant trader Alexander Gerko, it became an independent entity last year and is growing fast, gaining widespread recognition as a leading provider of liquidity across equities, FX, fixed income and commodities. The appointment of Deutsche Bank veteran Zar Amrolia as co-chief executive, alongside Gerko, in October 2015 has given XTX additional clout among industry participants and regulators. With an average daily volume of $75 billion and a headcount of 67 employees, XTX is one of the more transparent specialist liquidity providers, with a business model that centres on holding risk for longer than both bank and non-bank competitors. As risk appetite has dropped across the industry, XTX holds risk for more than 10 minutes in G-10 currencies and 20 minutes in emerging markets.