(Bloomberg) -- Citadel Securities LLC Chief Executive Officer Peng Zhao 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 isn’t considering the move right now.
“We’ve seen way fewer IPOs than we used to,” Zhao said at Citadel Securities Global Macro Conference in New York on Wednesday. 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 in an interview with Bloomberg TV. “When you ask me whether we’re 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 Chase & Co. Chief Executive Officer Jamie Dimon, who this week said the US and the UK should make it easier for companies to go public. Some $36.3 billion has been raised via first-time share sales on US exchanges this year, and while that’s a 64% jump from the stretch seen in 2023 through 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% to $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 programs.
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% 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. Esposito said in a separate interview that despite leaving Goldman for a rival firm, he’s now finding “much better opportunities” to partner with the largest banks.
“They are looking to reduce some of their complex risks. We’re in the risk management business,” he said. “Partnering on risk transfer with the largest banks is very much on our firm’s strategic agenda.”
He also said the firm sees an “enormous opportunity” to partner with the mid-tier banks, where it can provide them with liquidity and “access to tight pricing.”
--With assistance from Sonali Basak and David Morris.
(Updates with comments from executive in final paragraph.)
©2024 Bloomberg L.P.