The UK-registered branches of US market-making firm Citadel Securities (CS) have reported their financial results for 2023. Their combined profit increased by 35% compared to the previous year, though one entity performed significantly better than the other.
Citadel Securities UK Shows Revenue and Profit Growth
Two new financial reports from CS Group subsidiaries have appeared in the UK's Companies House: Citadel Securities (Europe) Limited and Citadel Securities Finance (UK) Limited.
The first entity focuses on liquidity provision and market making in equities and futures. Additionally, it provides trading algorithms and portfolio management to other entities within the group.
Revenue stood at $432 million, down from $499 million reported the previous year. Despite reduced expenses, total comprehensive income slightly suffered, settling at just under $113 million, a decrease of nearly 0.5% compared to 2023 results.
“The decrease in income and operating expenses was in line with expectations following a corporate structure reorganization which resulted in all staff employed by the company transferring to related CS Group entities,” the report commented.
However, the decline was offset by growth in trading revenues, driven by higher volumes in key markets for Citadel Securities Europe. In 2023, operating profit reached $151 million.
As for Citadel Securities UK, its core activity is investing in financial instruments on a proprietary basis. It also provides treasury and cash management services to companies within the CS Group.
According to data published by the company, total income was $1.8 billion compared to $1.2 billion reported the previous year. Operating costs jumped to $906 million from $520 million, but despite this, total comprehensive income rose by over 35% to $790 million, compared to $575 million reported in 2023.
“As a result of positive trading performance, shareholder's equity increased during the year to $1.9 billion and the company's long-term debt including accrued interest decreased during the year to $9.5 million,” the company stated in the report.
The combined income of both Citadel Securities entities in the UK, which reported their data in recent days, reached over $900 million.
Citadel Securities and $7 Million SEC Penalty
Last year, the US Securities and Exchange Commission (SEC) imposed a $7 million fine on Citadel Securities for violating Regulation SHO, which governs short-selling practices. The SEC found that Citadel Securities had failed to properly mark sale orders as long, short, or short exempt over a five-year period.
The investigation uncovered millions of incorrectly marked orders, with short sales mislabeled as long sales and vice versa. This misclassification stemmed from a coding error in Citadel Securities' automated trading system. Compounding the issue, the firm unknowingly provided this inaccurate data to regulatory bodies, including the SEC itself.
This wasn't Citadel's first brush with regulatory issues. A few years prior, the Financial Industry Regulatory Authority (FINRA) had fined the company $275,000 for regulatory reporting failures and issued a censure order.
