Citadel Securities, one of the electronic trading giants on the market, has been expanding its designated market making business steadily since acquired it from KCG two years ago. Designated market making, or DMM for short, relates to the concept of human traders maintaining orderly and fair markets for certain stocks on the New York Stock Exchange.
Citadel is enjoying a market share increase in one of the last remnants of human trading. After acquiring the trading business in 2016, it developed it to facilitate the trading of more than 1,400 securities, including giants like Coca Cola and Walmart.
DMMs keep markets flowing smoothly. They’re irreplaceable during complex events like trading day openings and IPOs.
The electronic giant has moved up 71 positions since May 2016, which is more than any other trading company on the NYSE. The list includes initial public offerings, newly launched special purpose acquisition vehicles, and direct listings. That corresponds to a win-rate of 44% in this time frame, including the well-known direct listings of Spotify and the IPO of insurance firm AX A. Its win-rate is roughly 50% for 2018, showing the company is winning listings at an even faster rate.
Taking on this responsibility doesn’t offer the giant big fees, but it does enable them to set foot in the share buyback market, which is worth an estimated $800 billion.