Citadel Securities to Start Trading European Credit Swaps

Citadel Securities LLC is planning to start making markets in European credit-default swap benchmarks after expanding into trading of U.S. indexes earlier this year.

The company will buy and sell contracts on the Markit iTraxx Europe Index, which tracks swaps on investment-grade companies, and the region’s high-yield gauge this year, according to Paul Hamill, global head of fixed income, currencies and commodities for Citadel Securities. The Chicago-based firm, part of billionaire Ken Griffin’s Citadel LLC, already trades in markets including Treasuries and interest-rate swaps.

“It’s a market we absolutely plan to enter and will work hard to hopefully have the same level of early success we’re currently seeing in the U.S.,” said Hamill.

Citadel was a defender of reforms to the over-the-counter derivatives market, including the mandate that most swap trades be backed by a clearinghouse and traded electronically. Clearing has helped the firm enter a business typically performed by banks and compete with dealers that generate tens of billions of dollars in annual revenue from derivatives.

Citadel Securities started trading the Markit CDX North America Investment Grade Index and the Markit CDX North America High Yield Index in April after hiring credit derivatives index trader Tian Zeng from Citigroup Inc. in December. It also hired Zhennan Wang from BNP Paribas SA in May, according to Hamill.

The firm is making many high-profile appointments, with Goldman Sachs Group Inc.’s Cory Laing hired to run sales for exchange-traded funds and Microsoft Corp.’s chief operating officer Kevin Turner named chief executive officer this month.

Contracts on the latest series of Europe’s investment-grade index covered a net notional $59.5 billion of debt on July 8 while the junk benchmark covered $17.5 billion, according to the data compiled by the Depository Trust & Clearing Corp.

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