- Talks come amid bank departure from wholesale market-making
- Citadel, KCG dominate the industry, according to Finra data
Citadel Securities is in talks to buy Citigroup Inc.’s electronic market-making unit Automated Trading Desk, according to people familiar with the matter.
The people, who asked not to be named because the talks are private, didn’t disclose a potential sale price. Negotiations are still in flux and a deal could fall apart. Citigroup purchased Automated Trading Desk for about $680 million in 2007.
Citadel is already one of the largest market makers -- the industry term for traders that facilitate others’ transactions -- in assets like stocks. If Citigroup parts with Automated Trading Desk, it’ll represent the latest bank to retreat from market making.
Automated Trading Desk -- considered one of the first high-frequency trading firms -- was also shopped to algorithmic hedge fund Two Sigma Securities, according to one of the people.
Representatives of Citadel, Citigroup and Two Sigma declined to comment.
The talks come as banks veer away from the business of striking deals with retail brokers to execute orders from individual investors. Bank of America Corp. dismantled its own wholesale market-making unit two years ago. Citadel and independent brokerage KCG Holdings Inc. have emerged as heavyweights in the industry, topping the list of biggest wholesale market makers, according to data on U.S. stock trading from the Financial Industry Regulatory Authority.
State and U.S. authorities are looking into trading practices at Citadel and KCG’s market-making units, Bloomberg News reported earlier Tuesday.