Jane Street, the finance world’s best-kept secret, is set to report $4.4 billion in trading revenue for last quarter

What’s going on here?

Secretive trading firm Jane Street revealed that it’s on track to bring in $4.4 billion from trading alone last quarter, leaving the industry talking while it reverted back into the shadows.

What does this mean?

Jane Street may be the most important finance firm that you’ve never heard of. Not only is it making more money from trading than many of the biggest investment banks, but it also keeps financial markets in check by facilitating the buying and selling of stocks and other assets. To do that, Jane Street relies on exclusive, proprietary technology and strategies, and purposefully keeps a low profile to skirt the heavy regulations that hamper banks. Yet, the latest results are hogging the spotlight. While still unaudited, they show that Jane Street expects to have made $4.4 billion in revenue from trading last quarter, with $2.7 billion of profit. That’s around $3 million of profit per employee a year – likely unmatched anywhere else.

Why should I care?

For markets: Change is good (for some).

The more volatile the market is, the better for Jane Street. See, fast-moving stock markets often mean bigger differences between buy and sell prices, more frequent trades, and more occasions when a stock’s price careens away from the company’s intrinsic value – all opportunities to squeeze out extra profit. No wonder that trading desks have raked it in over the volatile last four years.

The bigger picture: There’s money hiding in the shadows.

Traditional banks have been bound by increasingly stringent regulations ever since the 2008 global financial crisis. So financial companies that aren’t banks – like Jane Street – have used their flexibility to catch up to the big dogs. In fact, those “shadow banks” now account for almost half of the global financial system’s total lending and investing activities. But that lack of regulation is a double-edged sword: unsupervised shadow banks could be an incredibly risky bet.