How a Secretive Trading Empire Is Taking Over Wall Street

0:01 Today, volatility is everywhere. Stocks rally as the S&P recoups its wartime losses. Market may be trying to figure out if they should listen to good cop or bad cop. Certainly, that's going to have an impact on global growth. In the middle of all this, some players are reaping huge rewards. Can you guess who? They're tech savants, highly quantitative, pretty secretive, smart, innovative. They're best in class at what they do, >> [music] >> and they're sitting at the top of the totem pole of all the Wall Street firms.

0:34 So, who are we talking about? [music] Jane Street. >> Jane Street. >> Jane Street. >> Jane Street. Okay, but why are they such a big deal? Well, the firm just made a record-setting haul, over 39 billion in 2025, out pacing the big banks and rivals. The firm is generating billions of dollars. The pace at which it is doing that is unlike anything that I think people anticipated would even happen. Even 5 years ago, it would have been unthinkable to paint a scenario where Jane Street would have pulled in more trading revenue than the biggest players on Wall Street. Money making at this pace has raised concerns that firms like Jane Street have an unfair advantage.

1:21 The high-frequency trading segment is under scrutiny after SEBI accused Jane Street Group of [music] manipulating stock and derivatives markets, a claim the US trading giant denies. This unwanted attention is mounting and threatens to reveal more secrets. Jane Street's combined the world of poker and the concept of solving problems really, really well. So, how long can Jane Street stay under [music] the radar while holding the best cards on Wall Street?

1:56 Once upon a time, Wall Street was like this. But the stock market has changed. Imagine a high-speed game of buy and sell happening on computers all over the world every second. A combination of innovation and a lot of money moving around very rapidly. A human blinks their eye in about 400 milliseconds. In about that same time of high-frequency trading computer can execute hundreds, if not thousands, of trade. That is the kind of tech edge we're talking about. It's not just identifying the right price, but being able to get there before anyone else to execute that trade.

2:49 Jane Street [music] is the middleman. You can think of the apps Robinhood, Schwab, and the ability to buy a share of Apple. You don't know it, necessarily, but there are players out there helping [music] facilitate that order. We have seen an explosion in the type of ways that you could trade any financial instrument. It could just be a plain vanilla stock. It could be a derivative tied to the stock. >> [music] >> As these products get traded in different formats and in different geographies, there is always going to be a little bit of price inefficiency.

3:25 >> [music] >> Price inefficiency means differences. By buying a bunch of something where prices are low and selling it where prices are high, you can profit from the [music] difference. It's a process called arbitrage. And by doing this over and over in milliseconds, Jane Street is making billions. Increasingly, the firm has been holding some positions for hours, days, [music] maybe even weeks. But its matching of buyers to sellers is why Jane Street and firms like it are called market [music] makers. Their role injects cash into this system, aka creating liquidity.

4:02 Liquidity is money and is very important particularly when when an issue or like JP Morgan is launching a new strategy. The early days of an ETF are very important to provide more liquidity and that encourages investors to come in and out of ETFs. >> [music] >> ETFs or exchange-traded funds are like a basket of [music] assets that trade as one package. They're often cheaper than other investment products, >> [music] >> helping more people get a piece of the pie. 20 years ago, I ran a big [music] portion of JP Morgan Asset Management. I had heard of Jane Street, but I had no clue that they were an important part of the ecosystem and that was really a reflection of the fact that ETFs were a small piece of the business at that [music] point.

4:48 Jane Street's place in this ecosystem has paid off as the popularity of ETFs have exploded. More are coming to market every year. The money flowing into them keeps growing and the amount they're trading is pushing 60 trillion. Jane Street, I think, very early on saw an opportunity to distinguish itself around solving for the complexity of ETF market making at a time where other banks were much slower to put resources into that.

5:20 >> [music] >> It's worth stopping to appreciate the sheer amount of data being processed here. ETFs are made of dozens, sometimes hundreds, and even thousands of individual securities and their pricing needs to reflect these underlying securities. [music] Designing the rules or algorithms that enable that pricing requires serious chops and Jane Street employees have them. The culture of Jane Street >> [music] >> is one of puzzle-solving, very mathematical, quantitative professionals. This has become a very desirable place for smart people to go work at.

5:57 Jane Street's roughly 3,500 employees split amongst themselves 9.4 billion in compensation in 2025. That's a lot of money to go around. >> [music] >> I've been to every firm on Wall Street in the financial industry, and I've never stepped foot on Jane Street's trading floor. I would love to kind of talk a lot about Jane Street's technology, but I can say this, nobody knows anything about Jane Street's technology that doesn't work there.

6:28 Maintaining a low profile helps Jane Street protect its secrets. The company declined to comment for this video. The interesting thing about Jane Street is to the outside world, there is no designated leader. It says it's a flat organization. Of the four founding members, the only one who's left behind is Rob Granieri. Granieri is a bit of an unconventional character on Wall Street. He's a Bernie man regular and owns a casino in Mississippi where a John Travolta movie was filmed.

6:59 >> [music] >> And according to his lawyer, his long-time support of human rights is what prompted him to get duped into funding an alleged coup against the government of South Sudan. Even [music] finding photos of Granieri is hard, adding to the firm's mystique. If you think about it, the only reason a wider audience even started hearing about Jane Street was because it was ID'd as the launchpad of Sam Bankman-Fried, the crypto wunderkind who flamed out spectacularly.

7:31 Connections [music] to the failed crypto exchange FTX keeps nipping at Jane Street's heels, and the publicity threatens to further crack the firm's shell. >> [music] >> But it's a very public regulatory matter in India that's shed the most light into Jane Street's inner workings. It all started when two of their traders were jumping ship to a rival firm. They were worried some of their proprietary trading strategies would be used at Millennium where those two traders were going, and they sued those two traders.

8:04 >> [music] >> That legal spat, of course, caught the attention of everyone on Wall Street. The case involving Jane Street's former employees was settled, but the probe into Jane Street's India operation continues. India's option market has been growing really in the last few years. The regulators in India looked at Jane Street's [music] activity, and essentially, they considered it manipulative in the way that they were able to influence [music] the way that prices were moving to their benefit. Now, Jane Street, in their defense, has said that the way that they were trading and the market movement, they were providing a service.

8:44 The problem for Jane Street is that the India probe has meant that there are just a lot more eyeballs looking at what they do, how they do it, and how much money they're making. Bloomberg has learned that China is examining how Jane Street [music] Group participates in its $859 billion ETF market. So, what is the problem in India today could expand into a headache in other markets. >> [music] >> One issue for regulators is that while market volatility can be dangerous for everyday people and their finances, many in the industry directly benefit.

9:20 The way markets have performed, the absolute rally that we've seen in the US and elsewhere, the fact that it has attracted a retail investor base like never before, that has meant that people in the middle of the buy and sell [music] orders will just have a successful run, and Jane Street is certainly reaping the benefits of that. Jane Street's capital stockpile has grown to 53 billion, which allows it to sometimes behave like a hedge fund.

9:51 Savvy bets, especially on some of those big artificial intelligence companies like Anthropic, and the surge in valuation for some of those companies has meant a sweet tailwind for Jane Street. But, [music] at the end of the day, a hedge fund, the money that they're trading with is their clients. Jane Street [music] is just reporting to themselves. The money that they make is their own, and the money that [music] they lose is theirs to lose. Jane Street also enjoys a level of freedom compared to banks, which, after [music] the financial crisis, have to play by a stricter set of rules. 2008 was a traumatic moment. The banks, in the aftermath of it, not surprisingly, became the bad guys. Regulation came in and made certain functions for the banks more difficult for them to do.

10:45 Doors opened, and here came firms like Jane Street. They kind of ran through it. Just because Jane Street isn't a bank doesn't mean it's not regulated. >> [music] >> It is. It has to abide by the rules of the markets in which they trade. And some days they might lose money, but over time, >> [music] >> they are developing the systems to be smarter about how they're making money. And sometimes [music] losing money is how you get smarter to make money in the future.

11:15 They're going to push and prod [music] the rest of the industry to keep up with them. I think the Jane Street story [music] is going to be a long one. >> Oh.