Citadel Securities buys Citi market-making assets

The market-making business of computerized trading giant Citadel is expanding by acquiring trading assets from a Citigroup subsidiary, the company said Monday.

Chicago-based Citadel Securities LLC is buying most of the equities market-making business of Automated Trading Desk Financial Services LLC, an early leader in high-frequency trading. The deal does not include ATD's options market-making business, Citadel said.

The deal is aimed at cementing Citadel Securities' position as a major market maker following its February purchase of KCG Holding's designated market-maker business at the New York Stock Exchange.

Financial terms of the transaction were not disclosed.

Market-makers are companies or individuals who provide trading liquidity to financial markets by buying and selling securities during trading sessions. They agree to purchase stocks, even without a having an immediate buyer, facilitating trades in the securities they handle.

Major banks have been leaving the equities market-making sector, enabling companies that specialize in high-speed trading to move in.

"This acquisition supports the growth of our industry-leading equities business and reflects our commitment to leveraging our global footprint, cutting-edge technology and trading expertise to meet the diverse needs of our clients as traditional providers continue to exit this space," said Jamil Nazarali, the head of Citadel Execution Services.

Citadel Securities said it executes stock trades for approximately 14% of U.S. consolidated volume in listed equities and 34% of U.S. retail equities volume. Citadel also operates a major hedge fund.

Separately, the U.S. Department of Justice is investigating the market-making divisions of Citadel and KCG Holdings, examining whether the companies provided the best available prices to stock investors.