Speaker 1: Jane Street, Citadel Securities, Virtue Financial. These aren't necessarily household
Speaker 1: names that these high frequency trading firms dominate financial markets.
Speaker 1: Companies like these control up to half of equity trading
Speaker 1: volumes in the US, and their revenues are surging. In
Speaker 1: the second quarter alone, Jane Street made over ten billion
Speaker 1: dollars in net trading revenue, beating out all of Wall
Speaker 1: Street's biggest banks, including JP Morgan and Goldman Sachs.
Speaker 2: But it's also raised some questions. Earlier this year, Indian
Speaker 2: regulator SABBY accused Jane Street of market manipulation, something the
Speaker 2: company has denied. So how do these electronic market makers
Speaker 2: get an edge and make so much profit? How much
Speaker 2: of a threat do they pose to traditional Wall Street banks?
Speaker 2: And can they replicate their success in Asia.
Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence. I'm John
Speaker 1: Lee in Hong Kong and.
Speaker 2: I'm Kajudmitrivelso in Hong Kong.
Speaker 1: Today we're covering the sacred world of electronic market makers
Speaker 1: with Larry tab head of market structured Research at Bloomberg
Speaker 1: Intelligence based in the US.
Speaker 3: Larry, Welcome to the show.
Speaker 4: Glad to be here, Katya, John.
Speaker 2: Well, Larry, maybe we could start just, you know, kind
Speaker 2: of back to basics. What are electronic market makers? Is
Speaker 2: it the same as high frequency traders? How do they work?
Speaker 2: And wire people? Kind of raising eyebrows.
Speaker 5: You know, Kacha, that's a great question. There are a
Speaker 5: lot of subtle differences, but by and large, these are companies.
Speaker 5: You know, there aren't humans making decisions. Mostly they're machines
Speaker 5: making decisions, and they're making decisions by analyzing a tremendous
Speaker 5: amount of data from the various exchanges and trading venues
Speaker 5: and ascertaining is it time to buyer?
Speaker 4: Is a time to sell? Now?
Speaker 5: The high frequency traders, and you know, the ones that
Speaker 5: are priced a little bit more nefariously, generally take more
Speaker 5: liquidity than they provide. And what that means is that
Speaker 5: when they see a price that's mispriced, they're going to
Speaker 5: jump on it, and they're going to be faster to
Speaker 5: the market than you or me or anybody looking at
Speaker 5: market data and reacting with a keyboard. The market makers,
Speaker 5: which tend to be thought of a little bit more positively,
Speaker 5: they're a little bit more on the opposite side. They're
Speaker 5: providing liquidity. They're the guys, you know, creating the price
Speaker 5: that you see on the screen. Their goal is to
Speaker 5: outcompete other people who are providing prices and try to
Speaker 5: trade without their price being stale and getting picked off
Speaker 5: by someone on the other side. You know, this is
Speaker 5: not one versus the other. A lot of times it's
Speaker 5: combinations of both, because anybody who provides liquidity eventually is
Speaker 5: going to take liquidity. Anybody takes liquidity is going to
Speaker 5: provide liquidity, So it's just a matter of degrees. As
Speaker 5: well as, to a certain extent, a lot of quote
Speaker 5: unquote market makers are registered with exchanges because they get
Speaker 5: special pricing for providing quotes and providing bids and offers
Speaker 5: as long as the market is open.
Speaker 3: Lart, you made an interesting point.
Speaker 1: You're saying that these are computer programs or algorithms. Were
Speaker 1: they traditionally done by humans in the past. This was
Speaker 1: an area that was traditionally dominated by Wall Street, Right.
Speaker 5: These are the guys that you saw, you know, jumping
Speaker 5: up and down and screaming in pits historically, and actually
Speaker 5: a lot of them come out of the CME and
Speaker 5: traditional futures exchanges, you know, like trading places where they're
Speaker 5: trying to buy and sell large, concentrated or whatever they
Speaker 5: were trading back when the dan Ackroyd days and Eddie
Speaker 5: Murphy days. But yeah, these positions were mostly done by
Speaker 5: humans with paper tickets, gathering around centralized posts on exchanges,
Speaker 5: buying and selling. A lot of that has been automated
Speaker 5: to a certain extent. A lot of these strategies. You know,
Speaker 5: they're not the same, and they're absolutely not the same,
Speaker 5: but they do similar functions that they used to do
Speaker 5: with at exchanges.
Speaker 2: So how are they able to trade so quickly? You
Speaker 2: mentioned that it's usually a computer, so I'm guessing this
Speaker 2: is like an algorithm that's set up.
Speaker 5: The market makers have different types of strategies, okay, and
Speaker 5: each of the different market makers, given their backgrounds, have
Speaker 5: different strategies, so it's not like they're role of running
Speaker 5: off the same cueues.
Speaker 2: You know.
Speaker 5: The simplest type of strategy is a provide and take
Speaker 5: strategy where they buy one thing and they sell it
Speaker 5: either at a better price or in a different location
Speaker 5: at a better price, or they buy something and sell something.
Speaker 5: You know, there's a share of IBM they buy, they
Speaker 5: turn around and sell it. Then you get into more
Speaker 5: sophisticated strategies where you're trading an underlying stock and you're
Speaker 5: hedging it or you're training it against an ETF or
Speaker 5: a future or an option, and so you're looking at
Speaker 5: you know, the price of IBM maybe against the tech basket,
Speaker 5: or you're looking at it against the S and P
Speaker 5: five hundred or a future or an option based on
Speaker 5: the S and P five hundred, or the QQQ at
Speaker 5: you know, Nasdaq Tech basket, and then you get into
Speaker 5: the next derivative of that is an ETF. And that's
Speaker 5: kind of where Jane Street. That was Jeane Street's main business,
Speaker 5: making markets and ETFs, so they could better understand less
Speaker 5: liquid actually more bonds than stocks, but they do a
Speaker 5: big job in stocks, and they can take liquidity from
Speaker 5: individual investors selling bonds and then turn those bonds into
Speaker 5: ETFs and turn that liquidity over and then you start
Speaker 5: getting into even more complicated things like I'm going to
Speaker 5: do parish trades, or you know, I believe one share
Speaker 5: of IBM is worth one of HP and one of Apple,
Speaker 5: and so you wind up with one stock to another stock.
Speaker 5: And so there are all these different types of strategies
Speaker 5: as well as different locations. So less so in Asia,
Speaker 5: but more or so in the States. In Europe, the
Speaker 5: equity marketplace is very fragmented. We have sixteen equity exchanges
Speaker 5: plus another thirty two or so dark pools.
Speaker 4: So if you.
Speaker 5: Can understand which exchanges lead versus which exchange is lag
Speaker 5: and where liquidity may possibly be sitting in dark pools,
Speaker 5: you can execute within microseconds at one venue, turned around
Speaker 5: and sell it off in another venue.
Speaker 2: And sorry, what's a dark pool? Just for listeners? I
Speaker 2: mean you can't say dark pool to a reporter and
Speaker 2: not have me ask.
Speaker 4: No, that's fine.
Speaker 5: In the US they're called alternative trading systems. In Europe
Speaker 5: they're called MtFs. In Japan they're called pts's. But by
Speaker 5: and large it's a non exchange marketplace. Many of them
Speaker 5: don't display quotes, so you're used to seeing the Hong
Speaker 5: Kong Exchange have a bit or an offer on a stock,
Speaker 5: and you see the quotes because you see them, they're
Speaker 5: in effect lit up. A dark pool still has bids
Speaker 5: and offers for stocks, but they're not displayed, so you
Speaker 5: actually have to go to them and say, hey, look,
Speaker 5: I want to trade synpore telephone. Does anybody want to
Speaker 5: buy or sell Singapore telephone in this alternative trading system,
Speaker 5: and they may say yes, they have a buyer or
Speaker 5: seller that may want to trade at the bid or
Speaker 5: the offer or the midpoint or somewhere in between, or
Speaker 5: they may say no, we don't and they turn around
Speaker 5: and send your order back to you one filled, in
Speaker 5: which case you have to go to some other place
Speaker 5: and look for in These high frequency traders or market
Speaker 5: makers are connected to all of these venues at very
Speaker 5: very high speeds. Now when we're talking about high speeds,
Speaker 5: we're not talking about seconds. We're not even talking about
Speaker 5: milliseconds or thousands of a second. We're talking millions of
Speaker 5: a second and faster, so very very very quick. You know,
Speaker 5: they aggregate all of the market data from all these
Speaker 5: different vings news put them into a unified what we
Speaker 5: call the montage, basically a bigger order book, and so
Speaker 5: they know if they get a bid for this asset
Speaker 5: or that asset, they know that they can turn it
Speaker 5: around or sell it in another venue, and they can
Speaker 5: do it super quick.
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Speaker 3: Larry.
Speaker 1: What's the relationship between say, these retail brokers like Robinhood,
Speaker 1: they don't charge any commission rates and these electronic market makers.
Speaker 5: Oh man, now you're getting deeper into the weeds in
Speaker 5: the States. Less so in Europe because Europe doesn't favor this.
Speaker 5: But in the States they have something called payment for orterflow.
Speaker 5: And what payment for order flow is that the retail
Speaker 5: broker gets paid. So robin Hood gets paid by Jane
Speaker 5: Street or Virtue or Citadel a fraction of a cent
Speaker 5: to send their order to one of these market makers
Speaker 5: and they execute it in the US. As long as
Speaker 5: they execute at work better than the best price that's
Speaker 5: displayed in the market, everything's fine. So in the States
Speaker 5: they have these arrangements where Robinhood will send their order
Speaker 5: flow to usually a half dozen of these guys, maybe
Speaker 5: three or four, and they get paid for that order flow,
Speaker 5: they generally get zero point one the zero point two
Speaker 5: cents per share. Generally it's around eleven to twelve cents
Speaker 5: per hundred shares, and that's the payment for order flow
Speaker 5: they get. And because of that, and because Citadel or
Speaker 5: Jane st referred to, gets the first look at this trade,
Speaker 5: they're able to price it better than they would price
Speaker 5: a trade done on an exchange or trading venue. So
Speaker 5: by and large, the retail investor gets a better price
Speaker 5: and the market maker shares a bit of that profit
Speaker 5: with the retail broker.
Speaker 2: Just talking about robin Hood and this concept that the
Speaker 2: retail investor would end up getting a better price, there's
Speaker 2: this idea that high frequency trading is crowding out or
Speaker 2: you know, the retail investor would always be on the
Speaker 2: losing end because by the time you think about a trade,
Speaker 2: make the trade on a platform like Robinhood, these algorithms
Speaker 2: have already you know, it's already happened, the trade has
Speaker 2: already been made by another company. So yeah, what would
Speaker 2: you say to that.
Speaker 5: I think that's a little idealistic. First of all, by
Speaker 5: the time the Robinhood investor sees that data, Citadels of
Speaker 5: the world have traded a thousand times, So Citadel is
Speaker 5: working on a you know, as I said, a microsecond
Speaker 5: to a sub micro second basis. And most retail investors,
Speaker 5: especially ones that they're trading on a handheld device, hey,
Speaker 5: they're not trading anywhere near the kind of frequency that
Speaker 5: Citadel or chained for Eat, Virtue or xtx or any
Speaker 5: of these guys trade aut So they're really completely different markets. Now,
Speaker 5: if you're saying that you've got somebody with a super
Speaker 5: powerful computer that's sitting crunching all these numbers, then you
Speaker 5: have a little bit better argument that Citadel is picking
Speaker 5: their pockets. But for retail investors getting better than the
Speaker 5: best bid, best offer, it's pretty hard to argue with it.
Speaker 5: So they're in very different games. The individual investors time
Speaker 5: frame is not seconds or a sub seconds at best.
Speaker 5: They're you know, a couple of minutes, hours hopefully, you know,
Speaker 5: they're looking at years or more than that. I've always
Speaker 5: been a fan of saying generally that most retail traders,
Speaker 5: you know, that's not a wealth creation business.
Speaker 4: It's mostly a wealth destruction business.
Speaker 5: Most individuals don't have the time or patients to really
Speaker 5: look at it, or analyze the market or really, you know,
Speaker 5: you really have to be special to make money this
Speaker 5: day in a day out. They're better off with much
Speaker 5: buying good companies and holding them.
Speaker 1: Larry, we talked earlier of the competitive landscape between these
Speaker 1: market makers and you know the sell side or you
Speaker 1: know traditional Wall Street investment banks. You talked about how
Speaker 1: they have It sounds like they have superior technology. Is
Speaker 1: that the reason why they sort of started dominating the
Speaker 1: market making space and displaced started displacing Cell sign Absolutely?
Speaker 3: Is there any other reasons?
Speaker 5: Well, it's not just the technology, it's the ability to
Speaker 5: use it and the agility of their infrastructure. And what
Speaker 5: that means is if you think about somebody ely JP Morgan,
Speaker 5: or Bank of America or HSBC, you know, any any
Speaker 5: large bank that you would know that as a market
Speaker 5: making armor or capital markets arm. First of all, we're
Speaker 5: no longer in a world where these are investment banks
Speaker 5: versus commercial banks or retail banks. These are large diversified organizations.
Speaker 5: So when the head of trading says, I need to
Speaker 5: go buy a new connectivity line between here in Chicago,
Speaker 5: or between New York and Singapore, or New York and London,
Speaker 5: or Singapore and Tokyo or whatever. The head of the
Speaker 5: bank has to say, Okay, well they have to justify
Speaker 5: that expense. You know, should I give the money to
Speaker 5: the guy who just wants to buy a faster communications
Speaker 5: line that's going to buy me three milliseconds maybe? Or
Speaker 5: do I really want to buy new ATMs for the company,
Speaker 5: or do I want to enhance my credit card business,
Speaker 5: or do I want to put that to make more loans.
Speaker 5: So right off the bat, you know, in these banks
Speaker 5: there's a capital allocation process that takes time.
Speaker 4: It's not like you know, someone with.
Speaker 5: In the trading arm a Bank of American can just
Speaker 5: go buy a million dollars worth of servers and have
Speaker 5: them delivered in a week or even a month. This
Speaker 5: process can take six months to a year just to
Speaker 5: deploy a single server. And so these trading firms, on
Speaker 5: the other hand, they allocate capital very quickly, and they
Speaker 5: know that these investments make or break their businesses, so
Speaker 5: they tend to be much more agile and invest in
Speaker 5: this technology much faster than what the traditional bank would do.
Speaker 5: If you think about the technology investment and jp work,
Speaker 5: and I think they said there were five to ten
Speaker 5: billion dollars a year on tech. That completely towards any
Speaker 5: of these guys, all of these guys combined, but they're
Speaker 5: allocating it over such wide you know your raise. They're
Speaker 5: not paying their stabs the kind of money you know,
Speaker 5: consider an l and those guys are paying guys coming
Speaker 5: out of school almost a half a million dollars a
Speaker 5: year with no work exp sperience. I wish Bloomber paid
Speaker 5: that kind of salary.
Speaker 3: This is an assign.
Speaker 1: During my last business trip from Singapore to Hong Kong,
Speaker 1: when I landed at Hong Kong Airport and I was
Speaker 1: walking through the airport gates, I literally saw a hotel
Speaker 1: chauffeur have a sign and it said Jane Street Intern.
Speaker 1: I was like, and I was like, well, these interns
Speaker 1: have hotel chauffeurs. I went straight to the train by the.
Speaker 5: Way, right right, I go, and I got a London
Speaker 5: I'm gone to he Throw Express and I don't have
Speaker 5: a Bloomberg show for picking me up. But it's crazy
Speaker 5: that they're paying these people. And these people are really talented,
Speaker 5: and that's why there's a bidding war for them. So
Speaker 5: all through the value chain as well as the regulatory side,
Speaker 5: you know, before the crisis, Morgan, Stanley, Goldman, Zachs, Merrill, Lynch,
Speaker 5: these guys were regulated as non bank broker dealers and
Speaker 5: they didn't have to deal with the regulatory burden of
Speaker 5: being a bit. After the crisis, they all became banks.
Speaker 5: They were kind of forced to become banks. That comes
Speaker 5: with a much larger regulatory burden. And actually, if you
Speaker 5: look at some of the Dodd Frank stuff and a
Speaker 5: lot of the Basil three stuff, the regulators didn't want
Speaker 5: them to take trading risks. And so you think that
Speaker 5: these guys get boxed out of the business. Not really so,
Speaker 5: James Street, Citadel revert to a lot of these guys
Speaker 5: prime with the big banks. That's where they get their
Speaker 5: credit from. So now a Bank of America and we're
Speaker 5: Stanley taking the trading risks. They're taking the risks on
Speaker 5: the back end, on the lending custody, the banking relationship,
Speaker 5: from holding all the securities in cash that is being
Speaker 5: used to do a lot of this trading. So they've
Speaker 5: gone from the front of the line, you know, in
Speaker 5: terms of trading, to kind of the back of the
Speaker 5: line where they're making a lot of their money, you know,
Speaker 5: lending and doing securities lending.
Speaker 1: So would it be a simplification to say that on
Speaker 1: one end, like these electronic market makers HFTs competitors to
Speaker 1: Wall Street banks on the trading side, absolutely, but they're
Speaker 1: also customers on the prime side as well as you know,
Speaker 1: the commission revenue.
Speaker 4: Big customers.
Speaker 5: Not necessarily the commission side. It's more the financing side.
Speaker 5: It's more on the back end. It's more you know,
Speaker 5: they're they're clearing banks.
Speaker 2: Since we're talking about that, I wonder what could go
Speaker 2: wrong in that situation. You know the regulatory risk, of course,
Speaker 2: but when you're borrowing so much from banks and you're
Speaker 2: using it to make these trades, I mean, what are
Speaker 2: some of the issues that regulators where folks like Elizabeth
Speaker 2: Warren might be particularly worried about.
Speaker 5: Let's not get into my senator, She's worried about everything.
Speaker 5: So everybody's saying, oh, all these high frequency traders, bad, bad, bad,
Speaker 5: bad bad. All these high frequency market makers are putting
Speaker 5: these wonderful broker dealers out of business. On the other hand,
Speaker 5: we have not seen a marketmaker collapse. If you go
Speaker 5: back fifteen twenty years, every year or two you'd see
Speaker 5: a big Bank, Bearings Bank, Sumi Tomo Trading, and Copper.
Speaker 3: Nick Eaton, he was Bearings, Lahman Brothers best done well.
Speaker 4: Lehman was a little different.
Speaker 5: But you know, with human trading, things are done over
Speaker 5: the phone, and you write tickets and those tickets have
Speaker 5: to be processed and the deals are done by phone.
Speaker 5: So John Arkati, I'm talking with you. I buy a
Speaker 5: bunch of stock, or I buy a bunch of bonds
Speaker 5: from you. Guys, we negotiate a price. You say we're done.
Speaker 5: I say we're done. I'm supposed to write a ticket
Speaker 5: and have that process. What if that ticket sits in
Speaker 5: my drawer because all of a sudden the price has
Speaker 5: gone away from me. You know this trade. My back
Speaker 5: office doesn't know this trade. You try to send me
Speaker 5: securities and get payment. My back office says, we don't
Speaker 5: know this trade. And then the next thing is I
Speaker 5: double down because I'm right, Because I'm a huge trader,
Speaker 5: I can never be wrong. So I do a trade
Speaker 5: instead of with contient, I do it with a John's company.
Speaker 5: And I don't put that trip ticket because that looks
Speaker 5: like it's going south, and I don't put that in
Speaker 5: my system.
Speaker 4: And all of a sudden.
Speaker 5: These positions can get rather large to the tune of
Speaker 5: what used to be human. You know, billions of dollars
Speaker 5: of trading losses. You never see that at these places,
Speaker 5: especially since night blew up, because they had four risk systems.
Speaker 5: Most of these systems are done electronically, they're automatically processed.
Speaker 5: They go through a central risk book. The central risk
Speaker 5: manager looks at the positions constantly and says, hey, Larry,
Speaker 5: you know you're overexposed. I'm going to go sell out
Speaker 5: these positions. So think about trading strategies. If I'm a
Speaker 5: market maker, my job is to buy at the bid
Speaker 5: and sell at the offer. I'm working on a tiny spread,
Speaker 5: especially if the markets that I'm working in are moving
Speaker 5: in you know, milliseconds in microseconds. I am very very
Speaker 5: finely balanced on that knife edge. Okay, So if I
Speaker 5: want to stay fairly risk neutral, whatever I buy, I
Speaker 5: need to get rid of her hedge. Whatever I sell,
Speaker 5: I need to acquire or hedge. And so my position
Speaker 5: needs to be pretty risk monitored or managed all the time.
Speaker 5: And so these guys tend not to take huge positions.
Speaker 5: They tend to take lots of small positions. And that's
Speaker 5: a certain extent makes them less risky. I also think
Speaker 5: about it, so if I had to make a market
Speaker 5: and the market traded once a day, I got to
Speaker 5: quote very wide prices, and if I want to do
Speaker 5: any type of volume, I have to do it in
Speaker 5: big size. If the market moves faster, then I have
Speaker 5: more chance to get in and get out. And if
Speaker 5: the market moves even faster, I can make tighter prices
Speaker 5: and get in and out quicker. And to a certain extent,
Speaker 5: if I take too large a position, the market can
Speaker 5: move against me pretty quickly if the market moves really fast.
Speaker 5: So these business models really don't support the taking of
Speaker 5: very large positions. That said, some of these entities have
Speaker 5: hedge funds, and those hedge funds work differently. They have
Speaker 5: more capital, they could take longer positions, but the market
Speaker 5: making side generally doesn't. They had to get in and
Speaker 5: get out, or get in and hedge.
Speaker 3: Laurie, I wanted to bring this discussion to Asia.
Speaker 1: Now there's been a lot of news that you know,
Speaker 1: some of these marketmakers are expanding into this region. I
Speaker 1: think Citadel Securities is hiring aggressively in Asia. There's also
Speaker 1: you know, Jane Street Jaane Street's already been here for
Speaker 1: a while and then made a lot of money. Now
Speaker 1: they do have some regulatory risks in India. Yeah, yeah,
Speaker 1: like the regulator is accusing them of market manipulation. And
Speaker 1: by the way, Jane Street's vehemently denying these allegations. I
Speaker 1: think they will find over five hundred million dollars. But
Speaker 1: having said that, the regulator said that they made of
Speaker 1: it as four billion dollars over two years.
Speaker 5: I don't know there was some huge number. Yeah, I
Speaker 5: don't know whether that's true or not. Whether they were
Speaker 5: in a minuteulating the market or not.
Speaker 4: I don't know.
Speaker 5: In a certain extent, they could have been taking large
Speaker 5: positions just because the business model generally doesn't support it.
Speaker 5: If they're making enough money, risk managers tend to look
Speaker 5: the opposite way sometimes. I think we'll have to just
Speaker 5: see how that plays out. But from what I understand,
Speaker 5: the Indian market had very special structures that the derivatives
Speaker 5: market was much more liquid than the cash market, and
Speaker 5: so there was a very significant arbitrage between the options
Speaker 5: market and the cash market. Now, whether playing one against
Speaker 5: the other tightens the spread between the derivatives and the
Speaker 5: cash market, which is what it's supposed to do or
Speaker 5: whether it was manipulative. I have no idea. We'll see
Speaker 5: how that plays out in court. But theoretically, if the
Speaker 5: options market goes one way and I can buy an
Speaker 5: option at a theoretical cash price of ten and the
Speaker 5: actual cash prices is eight, I would be buying at
Speaker 5: eight dollars and selling in the derivatives market at ten
Speaker 5: all day long and pocketing the two. That's the business model,
Speaker 5: and theoretically what should happen is the cash price should
Speaker 5: go up and the derivatives price should go down. That's
Speaker 5: how arbitrage works. Now what actually happened, I don't know.
Speaker 5: Getting onto broader Asia, I think there's some really interesting
Speaker 5: things going on in ASA. Generally, the market makers move
Speaker 5: into markets based on capitalization as well as the economics
Speaker 5: in the market. So needs to be enough volume to
Speaker 5: make it worthwhile, and generally there needs to be the
Speaker 5: ability to hedge or get out of the position. Whether
Speaker 5: that means that the cash market is fragmented like in
Speaker 5: US equities market, but let's just say in mainland China
Speaker 5: it's hard to buy and sell on the same day.
Speaker 5: That becomes very hard, or if you only have a
Speaker 5: single market and there's one queue, it becomes very competitive
Speaker 5: to get in. So you'll see these guys go into
Speaker 5: the market based on the size of the market, So
Speaker 5: how much is traded there's only a single market, or
Speaker 5: whether there's multiple markets like Japan you know has pts's
Speaker 5: and based on a derivatives market, whether there's the ability
Speaker 5: to arbitrage cash versus stocks, or cash versus options, cash
Speaker 5: versus ETFs, cash versus single stock futures or index based futures.
Speaker 5: That's kind of you know, will be how these guys
Speaker 5: will pick the markets that they.
Speaker 1: Enter, and do you think they'll be able to replicate
Speaker 1: the success that they've had in the US with Asia,
Speaker 1: Like we already know that Jain Street makes a lot
Speaker 1: of money in Asia, but for the others as well, that's.
Speaker 5: A good question because they have not been as successful
Speaker 5: in Europe. They do okay in Europe, but not nearly
Speaker 5: as well as they do in the US, mostly because
Speaker 5: there's a lot more trading in the States than there
Speaker 5: is in Europe. You know, there's time market's like eight
Speaker 5: to ten times bigger in the States. Asia to a
Speaker 5: certain extent is smaller, but it really it depends on
Speaker 5: how efficient the markets are. Who are they trading against,
Speaker 5: is an institutional market or retail market? How quickly does
Speaker 5: the market move, How quickly can they get out and
Speaker 5: find the other side of the trade. I think over
Speaker 5: time all these markets will become like you know, pretty
Speaker 5: much fully electronic. Whether it's Jane Street who wins, or
Speaker 5: Citadel who wins, or a local player who wins. You
Speaker 5: know that's going to rue the level ofsistication in the
Speaker 5: market structure.
Speaker 1: Yeah, and letter, before we let you go, we have
Speaker 1: to ask, like, how do you get a job at
Speaker 1: one of these places?
Speaker 5: Generally they're looking for very mathematically advanced folks. You either
Speaker 5: need to code really really well, or you need to
Speaker 5: have really good quantitative skills. And that doesn't necessarily mean
Speaker 5: just math. You could be a physics major or you know,
Speaker 5: nuclear scientists or something.
Speaker 4: So somebody who can really.
Speaker 5: Handle lots of big data and lots of analytics and
Speaker 5: have a kind of a different way of thinking.
Speaker 4: They're generally not looking at.
Speaker 5: Finance majors or economics majors, are looking at much more
Speaker 5: technical type folks.
Speaker 3: Okay, great, thanks Larry for joining the show.
Speaker 4: Great to be here. A lot of fun doing this.
Speaker 1: You've been listening to Age Eccentric from Bloomberg Intelligence. I'm
Speaker 1: John Lee in Hong Kong, and.
Speaker 2: I'm katjadme Treva, also in Hong Kong. You can catch
Speaker 2: all our episodes on Spotify, Apple Podcasts, or wherever you listen.
Speaker 2: And this was produced and edited by Clara Chen. Thanks
Speaker 2: so much