> Jane Street has generated more than $40bn in net trading revenues in the year to Friday, even accounting for the July loss, which exceeds its entire haul for 2025, according to one of the people familiar with the matter.
This would make JS one of the most profitable trading firms of all time even with the loss.
But then what does it mean when the FT writes that that "revenue" number already accounts for the 15 billion losses? That the FT doesn't use these terms correctly either, and we can't really know what its reporting means?
That’s the correct usage. Revenue includes gains and losses. Profit will take that number and subtract out the operational costs (salaries, market data subs, etc).
It’s trading profit. No one is counting their gains from a trade while including their rent into it.
It’s a much easier to understand metric when you are discussing losses on a trade. No one is calculating losses including salaries.
It means Jane Street is still highly profitable in trades this year despite making a bad bet. If they have overhead that eclipses that, that is an entirely different metric.
Are they "trading" or "high-frequency-ripping-off-retail-investors"?
It's easy to make paper billions with synthetic shares and infinite deadline extensions for settlement. I'm old and still remember when Ken Griffin was lauded a clever person before he got caught with his hands in the GME mayo jar..
Liquidity providers like Jane Street, Citadel, et al make money on the spread. They also buy order flows from integrators, and retail investor order flows are now a product.
i.e. retail investor → brokerage platform → clearing/execution infrastructure → Jane Street → payment back toward the brokerage side of the chain.
Who captures the economic value created by retail order flow?
Jane Street.
In an ideal market, this product line shouldn't exist. Institutional investors should not be making money on the activity of retail investors.
What incentives determine where that flow is sent, and would investors receive better execution if their orders were exposed to genuinely competitive price formation rather than privately internalised by a concentrated group of wholesalers?
The regulators should be squashing any HFT related or retail order flow, but it's so opaque _by design_ that getting policymakers, or the general public, to understand that retail investors are paying some portion of tax on their $20T USD annual trades to these companies.
Granted, these order flows _sometimes_ work the other way -- and retail users get a better deal on a trade.. But would you really expect the market to be worth what it is, if that was the case less more often than not?
There is a clear and obvious conflict: the broker is supposed to seek the best execution for the customer while potentially being paid by the firm receiving that customer’s order. How can that be, when the broker's in bed with the liquidity providers?
PFOF and HFT are distinct concepts, but they are widely conflated in this thread. I don't agree that PFOF is inherently bad, but even if it were: it is not a valid criticism of HFT.
HFT raises pricing for retail traders by allowing front running of trades and makes the market less competitive overall for those without the infrastructure to do so. This isn’t even in question.
It's very much in question. As much as I hate to admit that since I do not like the concept of HFT existing as it's not providing very much value to society (imo) compared to the money made. The intellectual power behind this stuff would be much better put to use for something productive.
It likely lowers the transaction costs due to adding liquidity and narrowing bid/ask spreads for small retail orders.
But indirectly it likely raises costs for institutional investors like pension funds and large ETF managers making giant block trades on behalf their beneficiaries.
So tldr; Probably fractionally better pricing for your $5k GOOG trade, fractionally worse for your VOO holdings over the long term.
Does it really hurt institutional traders? How? Is it based on the idea that they can’t get the retail spreads? Because there is no world where they would have ever gotten them. A market maker would loose money doing that.
I'm certainly no expert whatsoever. This is just my understanding from talking with a few folks I consider quite smart who work in the space. Some working for HFT firms, some elsewhere. Also reading on the topic over the years.
There does seem to at least be some evidence that HFT firms decrease retail spreads overall. Either way, my main point being made is that negative impact to retail traders is very much in question.
Market makers are simply an artifact due to how shares are traded based on limitations that existed before computers. The aren’t some inherent aspect of having a stock market.
The money isn’t coming from thin air. If N people trade a a finite set of shares back and forth every day the only way to extract money from that set of people is for them to lose money.
Yeah, the stock market may be positive sum over the long-term, but it's certainly zero sum over the millisecond-term. Whether it's "retail" or "institutional" that is paying for HFT profits, it's all retail in the end.
> it's certainly zero sum over the millisecond-term.
Why do you think market-making is zero sum? Providing liquidity has value and market makers are compensated for that. (Milliseconds of liquidity being appropriately compensated with fractions of pennies.)
The millisecond-term zero sum game is part of what allows for a positive sum long term. For example, zero fee trading was pioneered by Robinhood and only possible because of payment for order flow, and as a result it's virtually unheard of now for retail to be paying per transaction. Now more retail investors can participate and everyone benefits. You can also point to lower spreads and faster execution as direct benefits.
No one? Mutual funds have managed to attract $33 trillion trading once a day. The demand for millisecond-level trading is almost entirely from a very small group of firms profiting from it.
And they are steadily losing new investment dollars to ETFs, which trade interday. I don't think interday trading is why ETFs are more attractive to all or most investors, but a 0.000001% (or whatever) cost advantage just falls below the noise floor. It isn't worth any other tradeoff.
That's true, we don't want it to do that, we want it to kill these parasitic entities. Much like one doesn't swat a mosquito because one will truly miss the amount of blood she's taking.
Isn’t Ken Griffin still considered very clever? Citadel is one of the most successful hedge funds of the is era and has largely accelerated since 2020.
Original headline is "Jane Street suffers $15bn loss in July market ructions".
HN guidelines do request use of original title and in this specific case the change of title is misleading by implying that situational awareness directly caused losses at JS.
In the text it says "the US trading firm was wrongfooted during last month’s market ructions including the meltdown at AI-focused hedge fund Situational Awareness" so while SA is mentioned the implications of a direct link to the losses is less strong.
Well, they did because JS owned a economics interest in SA, which led to the loss. So it was poor capital allocation, but really a systemic failure to delete leverage from the equation.
They're still up $25B for the year, so it's hard to feel bad for them :-)
On a more serious note, Jane Street has hired some very impressive technical talent. I'd work for them, myself, if I didn't have to relocate to Chicago.
I've applied to Jane Street dozens of times, interviewed twice, and have always been declined.
Obviously I'm not entitled to a job, so no hard feelings on that, but it's a little sad because I have always been a big functional programming nerd and it would be fun to work with Ocaml libraries. The fact that they pay really well is also appealing...
I regret not going through their application process 20 years ago, when I didn't know better. They did some kind of job fair thing and their starting salary was mindboggling, back when $600k/yr was "work there for 3 years and retire" kind of money.
"Jane Street has offices in some of the world’s most dynamic cities, including a presence in Amsterdam, Chicago, Hong Kong, London, New York and Singapore."
Always been a bit wary of Patrick. He reminds me of those people who in the 1990s/2000s would have become professional talking head guests on CNN. The older ex-academic/ex-industry guys who knew how to spin popular news stories into sound bites for the general public, while offering a veneer of authority. I'd rather get analysis from people who don't chase pop news stories for a living.
But he is very entertaining and has more than a veneer of authority. His early educational YouTube videos covering topics like derivatives pricing are genuinely very good.
> His early educational YouTube videos covering topics like derivatives pricing are genuinely very good.
Which is a common story these days. Nothing wrong with that, there are worse people who become the Youtube-content guy. I've just gone down that road enough times to know to eject early.
Is there anything he's said in particular that, given the benefit of hindsight, you feel has turned out to be misleading in retrospect?
Speaking for myself only, but if I were going to post a comment like yours on a public forum insinuating doubts about a specific person and vaguely implying their analysis is not trustworthy, I'd come armed with at least once example.
If we were talking about random niche people or some kind of inside drop on information, sure. But this is a generic argument lodged against one of the big prolific content creators, which means that the burden of evidence really falls on anyone who has the energy and will to spend. The information is well exposed and catalogued.
For people with 1M+ followers, anything that could be said has already likely been said.
It’s good to be weary of any YouTuber. I don’t think he’s a sensationalist. it’s not like he’s saying “don’t listen to those other people, I’ll bring you the -real- info”. And he’s sighting journalists and experts and providing references. When he introduces a framing concept it’s usually from a published book. When other commentators were telling me that big tech was hiding their debts to make their balance sheet look better, he offered a more he offered the more neutral perspective that it’s normal to count purchase agreements that way. But that spreading disclosure of information across so many places so that only the careful notice, leads to partial revelations, where being right doesn’t matter. Which seems a more useful take away than just big tech is being fraudulent about the ai bubble.
This isn't the TV news era. If you're into learning science you're not limited to choosing between the Michio Kaku or Neil deGrasse Tyson types. Same with finance and economics or any other topic.
“By our calculations, Jane Street ponied up a one-off $200mn to do the deal and then locked in a further $200mn of costs per annum, at least in part, to avoid us gawping at their numbers every quarter. Wowsers” [1].
> Jane Street has generated more than USD 40 000 000 000 in net trading revenues in the year to Friday, even accounting for the July loss, which exceeds its entire haul for 2025, according to one of the people familiar with the matter.
Sure. It’s still an embarrassing hit they’d want to keep secret, particularly if they’re still in those positions. Paying hundreds of millions to hide a $15bn MtM loss makes sense.
Read about their talent acquisition process and interview days. They certainly attract the most brilliant people, but it’s important guard rails are kept on them lest they repeat the same missteps their alumni have taken.
It's all so sketchy. Jane Street were investors in SA but presumably were much more sophisticated and savvy than Leopold. When SA got in trouble, 3 firms got into a bid war for the assets at fire sale prices: Citadel, Jane Street and a third I forgot. Citadel outbid the other 2, but it's all weird, like Jane Street wanted in on the popular boy's book that they knew was going to tank and just were waiting around in the water like sharks.
It’s sketchy to invest in a fund they probably knew full well had terrible risk practices and was likely going under on the first drawdown.
When Leopold went to pitch NY investors they all passed and thought he was full of it. He could only convince California tech guys. Savvy finance guys saw SA for what it was (leveraged beta trade). Jane street are finance guys, not California tech bros.
One theory (I don’t necessarily believe it): Jane Street was after the private part of SA’s portfolio (Anthropic), which is difficult to come by. Losing a few million dollars investing and getting in that network was worth it for them to try to groom Leopold to eventually sell them the private stake
But the private stake was sold to the highest bidder and Jane Street didn’t get it. It was always going to be shopped around if this situation occurred.
https://archive.is/05jR7
The real headline is buried in the article:
> Jane Street has generated more than $40bn in net trading revenues in the year to Friday, even accounting for the July loss, which exceeds its entire haul for 2025, according to one of the people familiar with the matter.
This would make JS one of the most profitable trading firms of all time even with the loss.
It's talking about revenue not profit
Net revenue generally means profit. Although I believe this also includes unrealized gains.
Basically profit from trading before they pay for salaries and office rent and all that jazz.
No net revenue is still the top line number (just minus some things like allowances or some other artifact or exception). Profit is the bottom line.
But then what does it mean when the FT writes that that "revenue" number already accounts for the 15 billion losses? That the FT doesn't use these terms correctly either, and we can't really know what its reporting means?
That’s the correct usage. Revenue includes gains and losses. Profit will take that number and subtract out the operational costs (salaries, market data subs, etc).
Not profit then at all is it? As I said
It’s trading profit. No one is counting their gains from a trade while including their rent into it.
It’s a much easier to understand metric when you are discussing losses on a trade. No one is calculating losses including salaries.
It means Jane Street is still highly profitable in trades this year despite making a bad bet. If they have overhead that eclipses that, that is an entirely different metric.
Are they "trading" or "high-frequency-ripping-off-retail-investors"?
It's easy to make paper billions with synthetic shares and infinite deadline extensions for settlement. I'm old and still remember when Ken Griffin was lauded a clever person before he got caught with his hands in the GME mayo jar..
> Are they "trading" or "high-frequency-ripping-off-retail-investors"?
HFT doesn't cost retail investors anything.
Liquidity providers like Jane Street, Citadel, et al make money on the spread. They also buy order flows from integrators, and retail investor order flows are now a product.
i.e. retail investor → brokerage platform → clearing/execution infrastructure → Jane Street → payment back toward the brokerage side of the chain.
Who captures the economic value created by retail order flow?
Jane Street.
In an ideal market, this product line shouldn't exist. Institutional investors should not be making money on the activity of retail investors.
What incentives determine where that flow is sent, and would investors receive better execution if their orders were exposed to genuinely competitive price formation rather than privately internalised by a concentrated group of wholesalers?
The regulators should be squashing any HFT related or retail order flow, but it's so opaque _by design_ that getting policymakers, or the general public, to understand that retail investors are paying some portion of tax on their $20T USD annual trades to these companies.
Granted, these order flows _sometimes_ work the other way -- and retail users get a better deal on a trade.. But would you really expect the market to be worth what it is, if that was the case less more often than not?
There is a clear and obvious conflict: the broker is supposed to seek the best execution for the customer while potentially being paid by the firm receiving that customer’s order. How can that be, when the broker's in bed with the liquidity providers?
PFOF and HFT are distinct concepts, but they are widely conflated in this thread. I don't agree that PFOF is inherently bad, but even if it were: it is not a valid criticism of HFT.
HFT raises pricing for retail traders by allowing front running of trades and makes the market less competitive overall for those without the infrastructure to do so. This isn’t even in question.
No, it doesn't. HFT lowers spreads for retail at the cost of slower market makers -- hedge funds. HFT isn't front-running (which is illegal).
It's very much in question. As much as I hate to admit that since I do not like the concept of HFT existing as it's not providing very much value to society (imo) compared to the money made. The intellectual power behind this stuff would be much better put to use for something productive.
It likely lowers the transaction costs due to adding liquidity and narrowing bid/ask spreads for small retail orders.
But indirectly it likely raises costs for institutional investors like pension funds and large ETF managers making giant block trades on behalf their beneficiaries.
So tldr; Probably fractionally better pricing for your $5k GOOG trade, fractionally worse for your VOO holdings over the long term.
Does it really hurt institutional traders? How? Is it based on the idea that they can’t get the retail spreads? Because there is no world where they would have ever gotten them. A market maker would loose money doing that.
I'm certainly no expert whatsoever. This is just my understanding from talking with a few folks I consider quite smart who work in the space. Some working for HFT firms, some elsewhere. Also reading on the topic over the years.
There does seem to at least be some evidence that HFT firms decrease retail spreads overall. Either way, my main point being made is that negative impact to retail traders is very much in question.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2183806
That seems to be about a fee change that increased costs for market makers, widening spreads.
Market makers are simply an artifact due to how shares are traded based on limitations that existed before computers. The aren’t some inherent aspect of having a stock market.
The money isn’t coming from thin air. If N people trade a a finite set of shares back and forth every day the only way to extract money from that set of people is for them to lose money.
Yeah, the stock market may be positive sum over the long-term, but it's certainly zero sum over the millisecond-term. Whether it's "retail" or "institutional" that is paying for HFT profits, it's all retail in the end.
> it's certainly zero sum over the millisecond-term.
Why do you think market-making is zero sum? Providing liquidity has value and market makers are compensated for that. (Milliseconds of liquidity being appropriately compensated with fractions of pennies.)
The millisecond-term zero sum game is part of what allows for a positive sum long term. For example, zero fee trading was pioneered by Robinhood and only possible because of payment for order flow, and as a result it's virtually unheard of now for retail to be paying per transaction. Now more retail investors can participate and everyone benefits. You can also point to lower spreads and faster execution as direct benefits.
> zero fee trading
Such wonderful marketing terminology.
That’s not actually free, the cost of trading with less information is quite high.
Or you could just hold auctions a few times per day and eliminate the billions of dollars spent trying to win a pointless race.
No one wants four-trades-a-day settlement to save 0.00001% or whatever in trading fees.
No one? Mutual funds have managed to attract $33 trillion trading once a day. The demand for millisecond-level trading is almost entirely from a very small group of firms profiting from it.
And they are steadily losing new investment dollars to ETFs, which trade interday. I don't think interday trading is why ETFs are more attractive to all or most investors, but a 0.000001% (or whatever) cost advantage just falls below the noise floor. It isn't worth any other tradeoff.
That's true, we don't want it to do that, we want it to kill these parasitic entities. Much like one doesn't swat a mosquito because one will truly miss the amount of blood she's taking.
Then the real trading will just move to hyper liquid or another platform that allows trading in real time.
Isn’t Ken Griffin still considered very clever? Citadel is one of the most successful hedge funds of the is era and has largely accelerated since 2020.
hedge funds are extremely volatile and tied to capital cycles - https://s-1.vercel.app/posts/the-capital-cycle-theory/
Original headline is "Jane Street suffers $15bn loss in July market ructions".
HN guidelines do request use of original title and in this specific case the change of title is misleading by implying that situational awareness directly caused losses at JS.
In the text it says "the US trading firm was wrongfooted during last month’s market ructions including the meltdown at AI-focused hedge fund Situational Awareness" so while SA is mentioned the implications of a direct link to the losses is less strong.
edit: more detail in https://www.reuters.com/business/finance/jane-street-took-15... confirms some losses linked directly to SA and some losses to their own positions.
>by implying that situational awareness directly caused losses at JS.
Correlation is not causation.
Well, they did because JS owned a economics interest in SA, which led to the loss. So it was poor capital allocation, but really a systemic failure to delete leverage from the equation.
They're still up $25B for the year, so it's hard to feel bad for them :-)
On a more serious note, Jane Street has hired some very impressive technical talent. I'd work for them, myself, if I didn't have to relocate to Chicago.
$25B is less than people realize.
They have $140B AUM.
So they are up ~18%.
https://observer.com/2024/11/jane-street-quantitative-tradin...
I've applied to Jane Street dozens of times, interviewed twice, and have always been declined.
Obviously I'm not entitled to a job, so no hard feelings on that, but it's a little sad because I have always been a big functional programming nerd and it would be fun to work with Ocaml libraries. The fact that they pay really well is also appealing...
> They're still up $25B for the year, so it's hard to feel bad for them :-)
No, even better: they're still up $40B for the year.
Their nerd sniping is top notch. I almost accidentally applied for a job with them.
I regret not going through their application process 20 years ago, when I didn't know better. They did some kind of job fair thing and their starting salary was mindboggling, back when $600k/yr was "work there for 3 years and retire" kind of money.
I don't think they even have a Chicago office, so it's good you didn't relocate there. They're based in New York.
https://www.janestreet.com/culture/our-offices/
Elsewhere on their website:
"Jane Street has offices in some of the world’s most dynamic cities, including a presence in Amsterdam, Chicago, Hong Kong, London, New York and Singapore."
https://www.janestreet.com/culture/benefits/?office=nyc&view... (scroll down)
Almost none of their ops is done there.
They list no jobs there.
My mistake! I must have mixed up that location with another company I also admire.
Archive link (https://archive.is/20260814213548/https://www.ft.com/content...)
Pretty short so I imagine more details and analysis are forthcoming.
https://youtu.be/rE75WvOtcu8 This video from Patrick boyle has a lot of detail.
Always been a bit wary of Patrick. He reminds me of those people who in the 1990s/2000s would have become professional talking head guests on CNN. The older ex-academic/ex-industry guys who knew how to spin popular news stories into sound bites for the general public, while offering a veneer of authority. I'd rather get analysis from people who don't chase pop news stories for a living.
He's offering entertainment not investing advice.
But he is very entertaining and has more than a veneer of authority. His early educational YouTube videos covering topics like derivatives pricing are genuinely very good.
> His early educational YouTube videos covering topics like derivatives pricing are genuinely very good.
Which is a common story these days. Nothing wrong with that, there are worse people who become the Youtube-content guy. I've just gone down that road enough times to know to eject early.
Is there anything he's said in particular that, given the benefit of hindsight, you feel has turned out to be misleading in retrospect?
Speaking for myself only, but if I were going to post a comment like yours on a public forum insinuating doubts about a specific person and vaguely implying their analysis is not trustworthy, I'd come armed with at least once example.
If we were talking about random niche people or some kind of inside drop on information, sure. But this is a generic argument lodged against one of the big prolific content creators, which means that the burden of evidence really falls on anyone who has the energy and will to spend. The information is well exposed and catalogued.
For people with 1M+ followers, anything that could be said has already likely been said.
Sort his YouTube videos by date and go to his oldest videos. He didn't used to do that.
So you can blame him for that style lately, but its not all he can do.
It’s good to be weary of any YouTuber. I don’t think he’s a sensationalist. it’s not like he’s saying “don’t listen to those other people, I’ll bring you the -real- info”. And he’s sighting journalists and experts and providing references. When he introduces a framing concept it’s usually from a published book. When other commentators were telling me that big tech was hiding their debts to make their balance sheet look better, he offered a more he offered the more neutral perspective that it’s normal to count purchase agreements that way. But that spreading disclosure of information across so many places so that only the careful notice, leads to partial revelations, where being right doesn’t matter. Which seems a more useful take away than just big tech is being fraudulent about the ai bubble.
That leaves basically nobody.
This isn't the TV news era. If you're into learning science you're not limited to choosing between the Michio Kaku or Neil deGrasse Tyson types. Same with finance and economics or any other topic.
100%
agree
Really weird writing and grammar errors. Odd
“By our calculations, Jane Street ponied up a one-off $200mn to do the deal and then locked in a further $200mn of costs per annum, at least in part, to avoid us gawping at their numbers every quarter. Wowsers” [1].
[1] https://www.ft.com/content/28a51284-98cc-4767-a306-0540d2656...
> Jane Street has generated more than USD 40 000 000 000 in net trading revenues in the year to Friday, even accounting for the July loss, which exceeds its entire haul for 2025, according to one of the people familiar with the matter.
Sure. It’s still an embarrassing hit they’d want to keep secret, particularly if they’re still in those positions. Paying hundreds of millions to hide a $15bn MtM loss makes sense.
Ever since the infamous work of some of their alumni I have wondered what the culture of JS is actually like.
Same as any other hedge fund: avarice.
Read about their talent acquisition process and interview days. They certainly attract the most brilliant people, but it’s important guard rails are kept on them lest they repeat the same missteps their alumni have taken.
Seems like it was banned, at least temporarily from trading in India: https://www.bbc.com/news/articles/c5y0zgrevl1o
If SA's losses were around $30B does that mean Jane Street owned half?
It's all so sketchy. Jane Street were investors in SA but presumably were much more sophisticated and savvy than Leopold. When SA got in trouble, 3 firms got into a bid war for the assets at fire sale prices: Citadel, Jane Street and a third I forgot. Citadel outbid the other 2, but it's all weird, like Jane Street wanted in on the popular boy's book that they knew was going to tank and just were waiting around in the water like sharks.
Nothing about any of that is sketchy. It’s in their mutual interest to avoid a fire sale.
It’s sketchy to invest in a fund they probably knew full well had terrible risk practices and was likely going under on the first drawdown.
When Leopold went to pitch NY investors they all passed and thought he was full of it. He could only convince California tech guys. Savvy finance guys saw SA for what it was (leveraged beta trade). Jane street are finance guys, not California tech bros.
> like Jane Street wanted in on the popular boy's book that they knew was going to tank
This is completely illogical. If they knew it was going to tank, they wouldn’t invest.
As conspiracy theories go, this one doesn’t even have a leg to stand on.
One theory (I don’t necessarily believe it): Jane Street was after the private part of SA’s portfolio (Anthropic), which is difficult to come by. Losing a few million dollars investing and getting in that network was worth it for them to try to groom Leopold to eventually sell them the private stake
But the private stake was sold to the highest bidder and Jane Street didn’t get it. It was always going to be shopped around if this situation occurred.
is it unreasonable to say that Jane Street was simply paying a small price for some situational awareness?
The bigger hit will be all their star quants going full solo (supervised with Claude).
What is Jane Street doing these days? Still HFT MM?
A little bit of everything
Usually ripping off retail investors - https://www.bbc.com/news/articles/c5y0zgrevl1o
Fuck, ocaml's never getting row polymorphism now, my day is ruined.
They were not fully aware of the situation, it seems.
...
I'll see myself out.
[flagged]
Explain
https://en.wikipedia.org/wiki/Satire