Citadel Securities CEO says regulation is deterring IPOs
CITADEL Securities chief executive officer Zhao Peng said the prospect of too much regulation in corporate America is deterring firms from going public – which he also cited as a reason why the market-maker is not considering the move right now.
“We have seen way fewer IPOs (initial public offerings) than we used to,” Zhao said at Citadel Securities Global Macro Conference in New York on Wednesday (Oct 9). He cited the “negative side effects” of regulation that comes from being a public company as well as the ease with which firms can raise capital privately instead.
“It’s giving people longer and longer pause,” he said. “When you ask me whether we are going to IPO or not, the answer will continue to be no. So from that perspective, we remain concerned about the over regulation and these negative attitudes towards corporate America.”
Zhao’s comments echo those by JPMorgan chief executive officer Jamie Dimon, who this week said the US and the UK should make it easier for companies to go public. Some US$36.3 billion has been raised via first-time share sales on US exchanges this year, and while that’s a 64 per cent jump from the stretch seen in 2023 to Oct 9, it’s still well below the average in the decade before the pandemic, data compiled by Bloomberg show.
Citadel Securities has quickly become a major force in financial markets after leveraging its early edge in algorithmic trading to encroach on turf traditionally dominated by the biggest banks. First-half net trading revenue rose 81 per cent to US$4.9 billion from the same period a year earlier, putting it well ahead of the pace needed for an all-time high, Bloomberg reported last month.
Founded by billionaire Ken Griffin, Citadel Securities matches buyers and sellers in the equity and fixed-income markets. The trading firm generates billions using algorithms to capture and profit from tiny differences in prices. Its clients include asset managers, banks, broker-dealers, hedge funds, government agencies and public pension programmes.
Citadel Securities is also a designated market maker, helping to list companies on the New York Stock Exchange.
The firm gained more prominence in the era of meme stocks, and has since ramped up its presence across fixed income beyond interest-rate swaps and Treasuries to serve institutional investors in corporate debt trading, starting with investment-grade bonds.
In the US, the firm now commands roughly 35 per cent of listed retail stock trades and almost a quarter of all equity trades. Its also added senior talent from the largest institutional banks, including former Goldman Sachs alumni Jim Esposito who joined recently as president, underscoring its push to go head-to-head with Wall Street heavyweights. BLOOMBERG
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