Who is Jane Street and why should an investment professional care? Well, it traded more than $9 trillion of securities in 2020, including 10% of the entire US ETF market and nearly 5% of the US equity market. In fact, Jane Street made more money in the first half of 2020 than rival Citadel Securities made all year. In this article, author Hide Not Slide, an anonymous market commentator, tells the firm's story and explains how it gained both a foothold and ultimately an edge in the market. Because of its depth, analysis and writing style, this piece is TabbFORUM's top enterprise story in 2021 and is this year's worthy recipient of the Editor's Choice award.
This article first appeared in TabbForum on June 22 2021
A tragic accident changed Tim Reynolds’ life forever one cold New York night on December 14, 2000.
Reynolds had hailed a cab after attending a holiday party in the city, and was asleep in the back seat when his driver crashed into the median on the Pulaski Skyway. Reynolds was jolted awake, realized the cab driver had fallen asleep at the wheel, and turned just in time to watch another car slam into his side, pinning him to the cab’s door. Paramedics arrived and quickly transported Reynolds to University Hospital in Newark, where doctors were able to save his life after emergency surgery.
“I was fortunate,” he would later recount in an interview – “I had two great doctors looking after me.”
Reynolds would spend the next three months in the hospital. Although his life was spared, his spinal cord had been crushed in the accident, and he was left paralyzed from the waste down.
He was 35 years old.
He had a wife and kids at home.
And he had just co-founded a high frequency trading firm called Jane Street Capital.
Fast forward two decades, and Jane Street is a global trading behemoth. The firm traded more than $9 trillion of securities in 2020, including 10% of the entire US ETF market and nearly 5% of the US equity market. They made more money in the first half of 2020 than rival Citadel Securities made all year. Their name has come up in conversations about systemically important trading firms in certain asset classes. And yet despite Jane Street’s long shadow cast over global financial markets, we barely hear anything about them, save the occasional press release or hush-hush quote here and there.
How did Tim Reynolds & his upstart firm manage to do it? What brought Jane Street from a small group of traders & coders to arguably the largest & most successful HFT firm in the world?