SCAMS-R-US

[XenaLives]

Stock market history...

The modern capital markets era begins in the mid-1970’s with the emergence and then convergence of three critical factors: derivatives, computers and data feeds. Together, these factors symbolize the birth of the quantitative research revolution and beginnings of trade workflow automation, and therefore, propel the conception of some of the most consequential product developments, trading strategies and trading firms that the financial world has ever known.

A subset of the most notable players were the pioneers in the emerging listed option market. In some ways, they were also the pioneers in quantitative research – the “first quant shops” – developing advanced capabilities in the modeling of option pricing frameworks by way of computers and mathematics. Of these, the primary leaders included Chicago’s O’Connor & Associates (OCA), founded 1977; Chicago Research & Trading (CRT), founded 1977; and Hull Trading, founded 1985. Philadelphia was strongly represented by Cooper Neff & Associates, founded 1981; and, Susquehanna International Group (SIG), founded 1987. There were a few others worth mentioning in this initial phase; John Stafford Jr’s, Stafford Trading and Lee Tenzer’s LETCO among them.

With only one exception, all of these pioneers were eventually acquired by banks, starting with NationsBank’s acquisition of CRT in 1992. OCA’s acquisition by Swiss Bank Corp. (SBC) followed shortly thereafter (with that union later becoming part of UBS when it merged with SBC in 1997). BNP acquired Cooper Neff in 1995. Goldman Sachs acquired Hull Trading in 1999. And, TD Securities, a unit of Toronto Dominion Bank, simultaneously acquired Stafford Trading and LETCO in 2002 following the dot.com options frenzy of 2001.

That exception – the only one of these firms to remain independent and privately held since inception – is Susquehanna International Group, otherwise known as “SIG.” Today, SIG is one of the most powerful players in listed derivative markets around the world, specializing in market making and proprietary trading across asset classes and regions, and including private equity and venture capital.

The story we are about to tell here – based on an assembly of publicly-available data and modeling of comparative companies to date – is one that has never been told quite like this before. Based on a deconstruction of their full series of holdings reports (on Form 13F-HR) and broker-dealer FOCUS reports (on Form X-17A-5), this story is based on Alphacution’s interpretation of some of the data that illuminates SIG’s business and trading strategies.

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http://alphacution.com/download-the-executive-summary-deconstructing-citadel-securities-2-2/