The Lehman Brothers traders leading hedge fund Squarepoint's new market maker
The electronic market making space may look very different in a few years' time. New entrants backed by major firms are appearing. They include STG Securities, a spinout of hedge fund Squarepoint that will have a similar relationship to the fund that Citadel Securities has to Citadel. It's being led by very tenured investment bank traders.
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Bloomberg reported yesterday that STG securities is led by Kirill Gellman, an ex-Lehman Brothers trader who made the jump to Barclays after its bankruptcy. He ran an automated options market making business at the UK bank up until 2020, when the unit was sold to market making firm GTS. His team appears to have been sold to STG in 2025; Gellman has been registered with the STG on FINRA since last October. STG's FINRA profile says the market maker's head of trading will be Eric Levine, another Lehman refugee at Barclays. Alok Mukherjee, who joined Lehman Brothers in 2007, is also registered with STG. Other Lehman alums linked to the unit include Alex Shleimovich, head of volatility market making technology at Squarepoint. It's a reunion of sorts; Squarepoint initially spun out of Lehman Brothers' prop trading arm.
STG is not just Lehman alums though; other FINRA registered personnel have come from Morgan Stanley, hedge fund Walleye and Two Sigma.
Competing with the likes of Citadel Securities and Jane Street is a tall order. Electronic market makers generate revenue by quoting buyers one price, sellers another, and pocketing the difference; The profits from individual trades are small, so these firms often need to operate on a massive scale. Citadel Securities, for example, is involved in ~25% of all US equities trades. This usually requires a firm to have a lot of capital at its disposal; Bloomberg reports that Squarepoint's AUM comes mostly from its principals and employees, rather than external investors, which might benefit STG as it grows.
As STG competes with the likes of Citadel Securities in the market making space, another new firm is competing with its execution services business. Optimal Market Technologies, backed by Optiver and Virtu Financial, is building an options execution platform under the leadership of Brian Donnelly, an ex-UBS MD and founder of its electronic volatility trading division. The firmis expected to launch the platform this quarter.
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