" Like other market makers (also known as nonbank liquidity providers), such as Jane Street and Virtu Financial, CitSec receives orders from retail and institutional clients. It processes customers’ trades by executing them mostly on an exchange or sometimes on an alternative trading system such as a dark pool. Citadel can make money off the spread between the bid and offer, but more important, it can use those securities in myriad strategies including hedging, mitigating risk, or trading for its own account. It’s a hideously complex, esoteric business, but a very profitable one. In the first quarter of this year, CitSec had $3.4 billion in net trading revenue, up some 45% from the same period last year, while net income climbed 70% to $1.7 billion, according to Bloomberg.

“Ken tells an amazing story about when he developed conviction on a trade, which he was right on,” says Billy Hult, CEO of Tradeweb Markets, a bond trading platform of which Citadel is a customer. “When Ken went to take the trade off, he realized how much money the market maker was making by unwinding his trade, and he said, ‘Wow, there are two great businesses to be in—the business of investing, and the business of market making—and they’re both really lucrative.’ ”

WHO do you think is on the other side of these trades?