Citadel Securities is sometimes dismissively referred to as “Citadel’s trading arm” -- seen as a forgotten backwater of Ken Griffin’s hedge fund empire, where quants toil on complex algorithms to arbitrage tiny differences in stock prices or calculate bid-ask spreads for Treasuries.

It’s much more than that.

The market-making firm, which is actually separate from Griffin’s hedge fund, generated $3.5 billion of revenue last year -- vastly outpacing nonbank peers and catching up with Wall Street rivals.

Griffin, 51, earned about $870 million from his hedge fund in 2018, itself a stunning payday that funded a remarkable appetite for high-end real estate and philanthropy.

Citadel Securities may be even more lucrative -- with profit margins that he has previously said should exceed 30%. His wealth, long estimated at about $10.3 billion, based largely on his investments in, and ownership of, the hedge fund business, is $5.1 billion higher, according to new calculations by the Bloomberg Billionaires Index. That vaults him to No. 86 on the ranking of the world’s 500 richest people, up from No. 150 at the start of this week.

Zia Ahmed, a Citadel spokesman, declined to comment on Griffin’s net worth.

Eight years ago, Citadel Securities was looking like a failed experiment. Griffin, seeking to take advantage of the disruption caused by the financial crisis, built a full-service investment bank that would compete with Wall Street by offering research, underwriting and mergers-and-acquisitions advice. The effort ended after about two years. Dozens of employees were dismissed as the firm focused anew on electronic trading.

Today, it’s a money machine, muscling banks out of markets they once dominated. It succeeded by being leaner and more technology-driven than bigger competitors, but also by taking advantage of regulations that hobbled those rivals. It even attracted interest earlier this year from Blackstone Group Inc., which weighed investing in Citadel’s hedge fund and market-making businesses. But those talks ended without a deal, people familiar with the matter said in October.

Citadel Securities started as a high-frequency market-maker in options before pushing into equities. Today, it dominates that realm, handling more than 1 of every 5 shares traded in the U.S.

In recent years, the firm expanded its offerings and global reach, operating in more than 35 countries. It’s a top 5 liquidity provider in foreign exchange and also trades Treasuries, credit indexes, ETFs and interest-rate swaps.

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