STG Group, a multi-asset trading firm specialising in systematic and quantitative strategies, and an affiliate of quantitative hedge fund Squarepoint Capital, is launching a new electronic market-making business, STG Securities.
According to a press statement, the new broker-dealer will operate independently from Squarepoint’s hedge fund operations and trade securities using its own capital.
Kirill Gelman will lead the new unit. Gelman previously oversaw automated options trading at Barclays, a business that was sold to electronic market maker GTS in 2020 and later acquired by STG. The firm plans to use the existing technology and personnel from that operation to support its trading activities.
Squarepoint reportedly declined to comment on the launch.
The hedge fund traces its roots to nQuant, a proprietary trading unit within Lehman Brothers, and has built its investment strategies around advanced quantitative models and large datasets. The firm manages more than $20bn in assets, though the majority of its capital comes from partners and employees rather than external investors.
The move into market making reflects a broader convergence across the trading industry. Hedge funds have increasingly incorporated high-speed trading strategies, while electronic market makers have begun taking on longer-duration positions and expanding their risk tolerance.
Historically, banks played a central role in market making on exchanges, but many have retreated from the business due to tighter regulation and balance sheet constraints. In their place, technology-driven trading firms have gained ground by leveraging speed, automation and data-driven strategies.
Some firms now combine both approaches. Jane Street, for example, deploys its own capital across asset classes globally while operating high-frequency trading strategies. Hudson River Trading began as a high-frequency trading firm but has increasingly expanded into longer-term strategies.
Citadel Securities, the market-making arm of Ken Griffin’s Citadel empire, also operates separately from its hedge fund and has built a major business executing trades for both retail and institutional clients. Two Sigma similarly runs both a hedge fund and a market-making division, Two Sigma Securities.
