Bloomberg Audio Studios, podcasts, radio news. Jim Sposito, thank you for joining us. This is, of course a great conference, or President of Cydel Securities, the conference has been going for a bit of time, but actually you joined from Golden Sachs a year ago. What's it like now being part of a non bank liquidity provider.
Okay, thank you for being with us today, Francine at our Future of Global Markets conference. I would say my one year anniversary at Citadel's Securities is noteworthy because what we're doing, I think is in stark contrast to what the big banks do. When you think about Citadel Securities in many ways, I think we're doing for trading what Amazon did for e commerce. And what I mean by that is we're meeting our clients through three distinct channels.
In terms of doing transactions with them. On exchange market making, we represent about a third of the volume on the New York Stock Exchange. We're obviously doing a lot in retail markets where we take flow off the books of Robinhood Charles Schwab Interactive Brokers. We're thirty five percent of retail volumes in this country, and more importantly, with this conference, we're directly covering institutions and we're trading their flow both
via the electronic and voice channel. I'd point out the big banks are only represented in one of those three channels nowadays. So in many ways, when I talk about Amazon, we're creating a network liquidity effect that our clients are benefiting from.
Jim, when you look at asset classes or geographies, is there anything that you're not into that you want to get into or where you want to expand?
Yeah, in equities we have a very significant position. We account for close to twenty five percent of daily US equity volumes, so we are a big important player in equity markets. On the other hand, in fixed income we can definitely get a lot bigger. We're just scratching the surface right now. In fixed income markets, we trade US rates, US investment grade credit. We're growing a European rate business, but in many ways we're only scratching the surface in
fixed income markets. That's definitely going to be a big part of our strategic build in years to come.
How much bigger do you have a target of how much market share you want towards or how quickly you want to grow?
Not yet, I would say We're trying to apply our skills and experience that made us so successful in equity markets to the fixed income markets, and we're taking our time. It's a very balanced and measure build at this moment, so there's no definitive plan as to what product will be rolled out next. Will it be high yield bonds, emerging markets, mortgage backed securities. I don't think we're that
far along. We want to master the products that we're currently trading and then you'll see grow from there.
Because there's quite a lot also ontogonization. Again, if you look at regulation, where do you see the best and biggest opportunity.
I think it's helpful. I think we're about to get a much more defined rule set around the trading of digital assets, and that will be important for the market at large, definitely be important for Citadel Securities. So that would be a product expansion that you could expect to see us get more active in, assuming we get a defined rule set. At our conference today, we have the founders of Calshi who are big making a market for
event contracts. You can think of that as making positions or trades in terms of the probability of a political outcome or an economic release. We're not yet involved in event contracts, but there's no reason why we couldn't consider that in the future.
Jim. When you look at AI and computing, how does it change building out of cell securities but also hiring.
Yeah, I'd say first with our clients, the topic top of mind right now is clearly how can we support our clients to incorporate AI to either make them more operationally efficient or to make them better investors. And so we're spending a lot of time with our clients around that topic. In fact, as you saw, a major theme really underpinning this conference today is AI. We brought a lot of the best from the West Coast here to
New York City. We had Jensen, the CEO of Navidia this morning, and I think that opened up the minds of our clients in a very profound way. And so AI is top of mind for our clients, it's top of mind for us, and I'm pleased to report we are making some progress around that front.
What are clients asking today actually have said dell securities when it comes to AI, or what are they asking you to try and understand where AI goes next? Yeah?
I think generally, we think a lot about our our own content, what differentiates us from the big banks, and so we don't want to be a me too bank in terms of the content that we provide to our clients. So we're doing maybe what you would expect us to do. We have differentiated skills around quantitative finance, around leveraging technology. Citadel Securities has been in business for twenty three years. We were built as a technology driven first organization. That's
core to who we are. That's what we're leading with in our client conversations, and so how do they get more efficient? How do they get smarter and become better investors from leveraging and harnessing the power of ai Jim.
We also talked about liquidity a little bit at the conference. I certainly had a conversation with Maria Droghi when we touched on that. You've in the past talked about, for example, teaming up some of the smaller banks right to help youild clients with some of the orders there. What conversations have you had recently that point into that direction.
Yeah, this is no longer a strategic idea, it's actually now playing out. So we are attempting to provide mid tier banks liquidity from Citadel Securities so they can better service their clients. I think there are probably one hundred banks around the globe that want to service their end user client in markets, jurisdictions, in places that we're never going to touch. What are we great at. We're great
at making markets providing liquidity. And so if you're some captive client sitting in Latin America, you might want to get covered by a bank where you have a relationship with We're never going to meet or touch that client, but we can provide the mid tier bank the liquidity to better service their client. And we're starting to set up a whole mid tier liquidity ecosystem to service these mid tier banks. It's still early days, but we've seen
signs where this model can work. It serves the end user client well, and it's servicing and allowing those mid tier banks to be much much more competitive against larger players.
And how do you think about the markets and this kind of environment. So, given the volatility that we've seen, will it stay like this or does it die down from here until the end of the year and beyond.
Yeah, Look, there's a lot of talk about is the capital expenditure for AI running too high. People are starting to speculate are we in some form of a bubble. I think a lot of the macro discussion in markets sort of correlates to what's going on and what we're talking about at this conference around AI. I think if we can have modest productivity gains in the real economy
by better leveraging AI, market valuations look absolutely attractive. You don't need a big productivity boost in order to support these valuations. By the way, there's also a lot of tough talk about growing stocks of debt and developed countries. How do these countries service their debt? They can grow their way out of it with productivity gains, So I think that's the big bet. Don't think we're in a bubble right now. Reasonably confident we will get these productivity gains.
But that's where the macro discussion really hinges right now.
Jim, thank you so much for your time today. Those is Jim as Posito. There are the president's securities