An ongoing legal battle offers a rare glimpse of the lucrative trading firm's financial details.

Jane Street Capital, the secretive quantitative trading shop best known as the former employer of Sam Bankman-Fried, is quietly emerging as a Wall Street powerhouse. With total assets swelling to $140.2 billion in 2024 -- a 34 percent increase from last year -- it has surpassed even Bridgewater Associates, the world's largest hedge fund by assets under management. Last year, the New York-based firm was behind roughly one of every ten equity trades in North America, according to a Financial Times analysis of its bond prospectus. And it's set for a record 2024, with $8.4 billion in net trading revenue in the first half of the year alone -- up 78 percent year over year, according to Bloomberg.

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Quantative trading firms like Jane Street differ from hedge funds and mutual funds in that they trade solely with their own capital rather than managing outside investor funds, focusing on short-term, algorithmic trades. About 80 percent of Jane Street's capital comes from members' equity, about 21.3 billion as of 2023. This proprietary model exempts quant firms from the detailed disclosure requirements imposed on hedge funds, allowing them to avoid revealing trading strategies and financial details.

Jane Street is currently suing the hedge fund Millennium Management for stealing one of its most lucrative trading strategies. Court filings revealed that Jane Street earned $1 billion in net revenue from the Indian options and futures markets in 2023 through what its attorney called the firm's "most profitable strategy." (The firm generated $10 billion in net trading revenue in 2023.) Jane Street claimed its profits from the India strategy fell by half in March only because Millennium was "using the same strategy."

Jane Street also revealed profits from the ETF market, in which it's a major player. The firm represents roughly 14 percent of all U.S. ETF trades and 20 percent of European ETF volumes. As an "authorized participant" -- an entity granted the exclusive ability to create and redeem ETF shares directly with the issuer to balance supply and demand -- Jane Street plays a crucial role in ensuring ETF prices stay aligned with their underlying assets.

This unique status, traditionally dominated by legacy banks, allows Jane Street to earn substantial revenue by managing liquidity and arbitrage opportunities within the ETF ecosystem. Last year, the firm handled 24 percent of primary market activity for U.S.-listed ETFs, 28 percent for international equity ETFs and 41 percent for fixed-income ETFs.

Attracting top talent with top pay

Jane Street's rise isn't just about strategy -- it's also about attracting top talent with sky-high compensation. Entry-level traders can expect a base salary as high as $300,000, while summer interns can earn up to $250,000 (on a prorated basis). Such salaries trump first-year investment bankers, who can expect up to $200,000, including a bonus, for a year's compensation. Jane Street is known to selectively recruit from top colleges like MIT, Stanford, and Harvard and graduates of top Ph.D. programs.

A quant firm employs advanced mathematical models and algorithms to drive its trading strategies, necessitating a diverse workforce including quantitative analysts, data scientists, software engineers and risk managers. Today, Jane Street has 2,600 employees across six offices globally -- New York, London, Hong Kong, Singapore, Amsterdam and Chicago) -- according to its website. Its headcount is similar to that of competitors like D.E. Shaw (2,500), Two Sigma (2,100) and Susquehanna International Group (SIG) (3,000).

Jane Street was founded in 2000 by Michael Jenkins, Tim Reynolds, Rob Granieri and Marc Gerstein; the latter three were previously traders at SIG, an elite trading firm based out of Philadelphia. Granieri is reported to be the only founder still at the firm. Reynolds now runs luxury resorts that fund art education for low-income students. Jane Street didn't respond to an Observer inquiry about Jenkins' and Gerstein's current roles. Today, the firm is run by a cadre of 30 to 40 senior executives whose names remain largely undisclosed.