Citadel Hires Zeng From Citigroup to Start CDS Market Making

  • Zeng `not the last hire' Citadel will make in credit trading
  • Citadel's new credit-swaps business to start in first quarter

Citadel Securities LLC hired Tian Zeng from Citigroup Inc., where he traded credit-default swap indexes, as the Chicago-based market-making firm expands its swaps business.

“He’s not the last hire we’ll make in credit,” Paul Hamill, global head of fixed income, currencies and commodities for Citadel Securities, said in an interview. The new business in credit swaps will start in the first quarter of 2016 and adds to an expanded market-making unit that already trades U.S. Treasury bonds and interest-rate swaps, he said. Zeng will start before the end of the year, Hamill said.

Citadel was one of the most outspoken defenders of the Dodd-Frank Act and the reforms it made to the $630 trillion over-the-counter derivatives market, including the mandate that most swaps trades be backed by a clearinghouse and traded electronically. In the past year, the firm has positioned itself to compete with JPMorgan Chase & Co. and other banks that generate tens of billions of dollars in annual revenue from derivatives.

“This is a continuation of the theme that central clearing is a critical enabler for non-traditional market participants to enter a business that was traditionally the reserve of the banks,” Hamill said. “It’s one of the bright spots in the fixed-income market for new participants to be able to come in and provide liquidity and innovation, because investors hear frequently about some banks pulling back.”

Hamill said the market-making group in swaps and Treasuries will eventually grow to employ 30 to 40 people, with four to six of those in credit. Before joining Citadel last year, Hamill served as the global head of currencies, rates and credit-execution services at UBS AG.