Jane Street’s quarterly trading revenues have surged to their highest level since the start of the pandemic, as the secretive high-speed firm flourished alongside traditional Wall Street market makers.
The group expects its first quarter net trading revenue will be roughly $4.4bn, more than double the level it achieved a year prior and up 35 per cent from the end of 2023, according to documents reviewed by the Financial Times.
The blockbuster figures underscore how Jane Street has quietly emerged as a trading powerhouse of global financial markets, out-earning a number of big rivals and banks.
The New York-based company estimated it earned net income of about $2.7bn in the quarter, giving it a net profit margin of more than 60 per cent. The sum lifted profits over the past 12 months to roughly $7.4bn. The firm, which trades tens of thousands of products, including currencies, exchange traded funds and options, reported profits of $5.9bn in 2023 and $6.7bn in 2022.
Jane Street noted in the document that the first-quarter figures had not yet been audited and could change. The firm declined to comment to the FT.
The numbers give a rare glimpse into just how much Jane Street’s trading business has grown in recent years to rival the operations of even the largest banks.
Trading emerged as a bright spot for many banks in first-quarter earnings reported over the past week, with revenues from stock and bond trading faring better than analysts were expecting at JPMorgan Chase, Goldman Sachs , Morgan Stanley, Bank of America and Citigroup.
Wall Street trading desks have benefited in the past four years from large market swings around the Covid-19 pandemic, Russia’s full-scale invasion of Ukraine and the decision by central banks to lift interest rates amid stubborn inflation.
The documents reviewed by the FT also showed how large of a player Jane Street has become in cryptocurrency markets, turning over more than $200bn worth of the coins over the past three years.
Bitcoin trading has leapt this year following the US launch of ETFs tracking the cryptocurrency . Spot volumes had jumped 44 per cent by the end of February from the end of 2023, according to a March presentation by rival trading firm Virtu.
Jane Street and Virtu play a pivotal role providing liquidity to the new ETFs as authorised participants.
Jane Street’s results were disclosed to potential lenders as part of its efforts to raise $1.4bn in bond markets on Wednesday, capital that will allow it to continue to expand. Strong investor demand meant the market maker could borrow more than the $1.25bn it had initially planned to raise, and it locked in a 7.15 per cent interest rate on the 2031 maturing debt, according to a person briefed on the matter.
The company — founded in 2000 by three veterans of trading firm Susquehanna and a former IBM developer — has broadened its financing sources in recent years, taking out a loan from institutional investors and establishing a revolving credit facility with JPMorgan.
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“This additional capital will support further organic business expansion,” the company wrote in its bond prospectus. “These business expansions have historically proved fruitful and have enabled us to scale our business, reach a wider client base, and expand into new markets, all while finding new cost efficiencies.”
The company noted that much of the capital it does have is used to maintain margin requirements with the prime brokers across Wall Street that lend to Jane Street, supercharging its trading operations.
The firm’s results in 2023 otherwise showed a modest decline in net trading activity. Jane Street said that was a result of the drop in volatility from a year prior, when the Federal Reserve began to aggressively raise interest rates, leading to sharp swings in asset prices.
Additional reporting by Joshua Franklin and Jennifer Hughes in New York