Scott Knudsen

@TheSpeculator0 Mean ≠ median

"mid level employees" aren't making 10m per year at Jane Street

@IamBitcoinTrail @EricBalchunas So who do you think is providing all the bids and offers? Quite a statement to claim that MMs have withdrawn all their liquidity and we just have empty order books now.

Market makers stopped truly making markets long ago. Jane Street, Citadel and others are are market takers whose job is maximum profitability at the expense of everyone else. They claim to provide liquidity to make markets most efficient, but never inject it when markets are in dumping because they profit the most off the huge arb trades in derivatives. It's efficiently making them the most amount of money.

Jane Street made about $40b in revenue last year, more than all the big Wall St banks and with only 3,500 employees. Wow.

@fasc1nate Why did she choose to kneel in the one area without soft carpet?

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Not great

@Nithin0dha Your interpretation of US market structure is off. PFOF helps customers get better execution. Dark pools intend to reduce institutional slippage. There is a reason US markets consistently perform so well, even during market stress.

You’ve got to hand it to SEBI for going after Jane Street. If the allegations are true, it’s blatant market manipulation. The shocking part? They kept at it even after receiving warnings from the exchanges. Maybe this is what happens when you're used to the lenient U.S. regulatory regime. Think about the structure of U.S. markets: dark pools, payment for order flow, and other loopholes that allow hedge funds to make billions off retail investors. None of these practices would be allowed in India, thanks to our regulators. That said, there’s a flip side. Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back— which seems likely —retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers. The next few days will be telling. F&O volumes might reveal just how reliant we are on these prop giants. I’ll share more data as and when anything interesting turns up. By the way, this is the summary from ChatGPT if you are unaware of the issue.

@chriscutaneo1 @vladtenev When retail traders drove up the prices of stocks like GME and AMC, Robinhood’s clearinghouse (DTCC) required them to post additional collateral to cover potential settlement risks. Robinhood didn’t have enough liquidity to meet these demands instantly.

@vladtenev Why’d you suspend trading for retail investors trying to buy $AMC and $GME

What’s a question you’ve always wanted to ask me?

@NobleNothing @RJRCapital If it’s supported by astronomical income, then reasonable to expect economic expansion and increased earnings. Multiples for most stocks are still reasonable. Though AI-adjacent ones have seen expansion. Time will tell if justified or not for that subset.

@SMKnudsen @RJRCapital Kinda. But forget earnings. It's multiple expansion. Young people are making a fortune and dumping 10%+ of their extraordinary pay into the market. This won't end. 2 separate economies. RJR perhaps isn't aware of how many kids are making astronomical $, nevermind the 50+ crowd

@BitcoinTina @RJRCapital @postprescience No. US equity (and ETF) options physically settle.

@RJRCapital @postprescience The options can always cash settle . Nearly certain there is always a back door.

@WSBsol @vladtenev Robinhood’s push to have the industry move to T+1 settlement should greatly reduce the likelihood of future DTCC funding issues.

@vladtenev Just don’t turn off the buy button

Robinhood has surpassed $20B in overnight trading volume since launching Robinhood 24 Hour Market last year. 🔥

@RodAlzmann Nice profit generating business. And impressive growth in crypto, ETF blocks, and options.

@TradingDutchman Most of the large firms have European and/or Asian operations that are currently able to support overnight US trading sessions. If there is additional demand (and revenue), then it should be a win for everyone.

This will get shot down for sure. Banks, pension funds, regulators, traditional asset managers don’t want to hire 4x staff to cover 24/7. Would be great for trading firms profits though, but definitely not 4x greater. ft.com/content/31c3a5…

@eX_ers @MacroAlf Restaurants have “tip reporting systems” and since most tips are paid via credit card, there is a fairly robust audit trail where restaurants report tip income directly to tax authorities and amounts can be reasonably verified.

Italian guy working in a US pizzeria share his end-of-day tips. Not too shabby?!

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@matt_levine This belongs in today’s newsletter.

@EricBalchunas If so, it would be good to have the article headline corrected. Totally changes the story.

BTW, he actually meant 8bps not 8%, a big relief bc an ETF's premium/discount (% dif bt ETF price and fair value of btc) is an imp measure of how arbitrage-able the ETF and its holdings are, which keep price close to fair value all day- something invs have come to expect w ETFs.

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